The Supreme Court of Minnesota has held that there is no territorial limit to the Minnesota Franchise Act’s (MFA) provision barring unfair practices, but nevertheless affirmed dismissal of MFA claims where the parties’ relationship did not constitute a franchise. Cambria Co., LLC v. M&M Creative Laminants, Inc., 2024 WL 4139394 (Minn. Sept. 11, 2024). Cambria is a Minnesota company that manufactures and sells its own brand of quartz surface products. Cambria and M&M were parties to business-partner agreements in which Cambria would fabricate and deliver quartz slabs to M&M for installation. Cambria terminated the eight-year business relationship when M&M became indebted to Cambria for over $180,000 for countertops that had already been delivered. Cambria filed suit against M&M to recover the amount M&M owed for unpaid invoices, and M&M asserted a counterclaim for unlawful termination of the parties’ alleged franchise agreement under the MFA. Cambria moved for summary judgement on M&M’s counterclaim arguing that the business relationship was not a “franchise” under the MFA because no franchise fee was paid. Additionally, Cambria argued that M&M could not file suit for damages under the MFA because M&M is an out-of-state company. The district court granted Cambria’s motion for summary judgment finding that M&M did not pay a franchise fee and therefore could not bring a claim against Cambria under the MFA. The Minnesota Court of Appeals affirmed and also concluded that M&M was precluded from asserting the counterclaim because M&M does not operate in Minnesota.
The Minnesota Supreme Court considered these two issues. First, the Minnesota Supreme Court held that the MFA does not preclude an out-of-state company from enforcing a claim of unfair practices under section 80C.14. It looked to the plain language of the statute and found it did not indicate the Legislature intended the provisions to be enforceable only by franchisees within Minnesota. The Minnesota Supreme Court reasoned that when “the Legislature uses limiting or modifying language in one part of a statute, but omits it in another, we regard that omission as intentional and will not add those same words of limitation or modification to parts of the statute where they were not used.” Although M&M was not barred from asserting a claim under the MFA because it was based outside Minnesota, the Minnesota Supreme Court nevertheless affirmed the summary judgment ruling because M&M did not pay a franchise fee to Cambria and was therefore not a franchise under the MFA. M&M argued that the payments for fabrication services were a required payment for services constituting a franchise fee under the MFA, but the Minnesota Supreme Court disagreed stating that payments for manufacturing services included in the purchase of goods at a bona fide wholesale price are exempted from the definition of franchise fee.
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