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Is withholding royalty payments a valid way to get a franchisor to adhere to the franchise agreement?

 

A: If you are a franchisee in New York, and your franchisor has failed to uphold some part of the franchise agreement, it is never a good idea to withhold your franchise royalty payment. In fact, it is never a good idea to withhold your franchise royalty payment. By withholding this payment, you will only cause a deeper rift between you and the franchisor.

Although this may seem unfair, a royalty payment cannot be used as a weapon in a franchise dispute. Courts have refused to let this type of action become legitimate. In any case, the withholding of a franchise royalty payment would violate the terms of your agreement, and could allow the franchisor to take punitive action against you.

In fact, even when there is a revolt among a number of franchisees, those franchisees cannot withhold their royalty payments together. Such an act may be a violation of U.S. antitrust laws, in some cases.

Therefore, if you have become involved in a dispute with a New York franchisor, you should immediately get the professional help of a New York franchise lawyer. A New York franchise lawyer may investigate your case, and advise you on the best course of action to take.

Rather than withhold a franchise royalty payment to settle a dispute, you may choose to: 

  • speak with your franchisor, and settle the dispute without involving the courts; or
  • resolve your franchise dispute in a formal court of law. 


In court, your New York franchise lawyer may represent your legal interests.

Contacting a New York Franchise Lawyer

If you are an entrepreneur who is interested in franchising your business there is a lot you need to know, including the significance of evaluating your trademark and how to approach the preparation of your FDD. For a limited time, get New York franchise lawyer Charles N. Internicola, Esq's franchise law report to determine whether or not your business is right for franchising. Contact us today at 1-800-976-4904 for more information about Mr. Internicola's franchise law services in New York and how he assists entrepreneurs franchise their business nationwide.




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