What are the grounds for termination of a franchise?

A:

Generally, a franchise agreement will identify the grounds upon which the franchisor may terminate a franchise. A franchisor may reserve the right to terminate a franchise relationship at its inception because of: 

• the franchisee's failure to lease or purchase an acceptable business facility;
• the franchisee's failure to develop a business facility in a timely fashion;
• the franchisee's failure to satisfactorily complete their training; or
• the franchisee's failure to open the franchised business on a timely basis. 

In addition to these reasons, there will be numerous grounds to terminate a franchise after the business has opened. A franchisor will often reserve the right to terminate a franchise immediately, without giving the franchisee an opportunity to fix the problem. This may happen upon: 

• bankruptcy;
• insolvency;
• discovery of material misrepresentations;
• abandonment of the franchised business;
• loss of the right to possess the premises;
• understating revenue;
• repeated breaches;
• operation of the business in an unsafe manner;
• assignment or transfer without the franchisor's approval;
• conviction by a trial court or pleading no contest to a felony or other crime;
• interference with inspection rights;
• dishonest or unethical conduct adversely affecting the trademarks;
• failure to pay taxes;
• termination of other franchises that the franchisee has with the franchisor;
• unauthorized use of the licensed trademarks or disclosure of confidential information; or
• the franchisor's withdrawal from the franchise market. 

If your franchise has been terminated for any of these reasons, you should get the professional help of a New York franchise lawyer to learn about your options. A New York franchise lawyer may be able to help resolve your franchise business issues. 

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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