Reassessing Your Right to Terminate a Franchise
When you reassess the terms of your franchise agreement‚ one condition that you should reconsider is your right to terminate a franchise. In a standard franchise agreement‚ there should be several breaches that‚ if committed‚ will allow you to terminate an agreement. For instance‚ if a franchisee fails to maintain the standards of their franchise premises you may choose to terminate that franchisee's agreement.
When you review the section of your franchise agreement that deals with termination‚ you should identify the defaults that allow for a franchisee to cure a particular default. A cure period is the time in which a franchisee may correct a default‚ and therefore avoid termination. You should also identify which conditions of the franchise agreement do not permit a cure period.
Some other breaches of the franchise agreement that may be cause for termination include:
- the failure to fulfill minimum purchase requirements;
- the misuse of intellectual property;
- the sale of unauthorized goods or services; and
- the violation of a non-compete agreement.
When reassessing the terms of your franchise agreement‚ you may want to get the help of an experienced franchise lawyer to review the terms of your existing agreement‚ and identify opportunities for improvement.
By Charles Internicola December 31, 2010
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