Legal Remedies for Franchisees | Internicola Law Firm

Legal Remedies for a Franchise Dispute

If you are a franchisee and you have a dispute with the franchisor, the question that arises is what are legal remedies and options that may be available to you. Much will depend on the circumstances, such as whether or not you are faced with a termination issue, non-renewal issue or an issue involving alleged breaches of the franchise agreement. Situations will vary significantly, but as a franchisee when evaluating and understanding your legal rights it is important to understand the legal remedies that may be available to you. Below we review some of these legal remedies and issues that you should be considering and evaluating.

Start By Understanding the Cause for the Dispute

When evaluating the legal option, rights and remedies that may be available to you, it is important to first assess where you are at in the franchise relationship. Important questions that you need to answer and discuss with your franchise lawyer will include:

  1. Whether or not you are in default of the franchise agreement?
  2. Whether or not the franchisor has sent you a default notice?
  3. Whether or not you have sent the franchisor a default notice?
  4. Whether or not the franchisor is attempting to terminate your franchise agreement?
  5. Whether or not you want to terminate the franchise agreement?
  6. Whether or not the franchisor controls key business assets such as the lease to the
    location of your franchised business?
  7. Whether or not you want to continue to operate the business under a different name as an independent business if you are successful in terminating the franchise agreement?

The answers to these questions will play an important role in understanding the legal rights and remedies that may be available to you as a franchisee.

Franchise Regulation Rights

Although franchising and the relationship between you and the franchisor is one of “contract” that is defined by the terms of your franchise agreement, there are a number of franchise laws and regulations that may afford you some very substantial rights and negotiating leverage. These franchise regulation rights and their associated remedies are derived from the franchisor’s obligation to timely and properly disclose its FDD to you. No matter how long ago you signed your franchise agreement if either:

a) The franchisor did not disclose its FDD to you no less than 14 days prior to signing the franchise agreement or paying money to the franchisor;
b) The franchisor’s FDD was not current or contained a material omission when it was disclosed to you; or
c) The franchisor’s FDD was not currently registered if you or the franchisor were located in a franchise registration state,

Then the right and remedy that may be afforded to you would be recission whereby you may be entitled to terminate your franchise agreement and obtain a refund of the fees that you paid to the franchisor. There are other regulatory rights that may be available to you under certain state franchise laws. A number of states have enacted franchise relationship laws which may supplement your contractual rights. Depending on the state that you are located in you may have supplemental rights that prevent the franchisor from terminating your franchise and affording you additional renewal rights.

Franchise Contract Rights

Your relationship with the franchisor is a contractual relationship and an evaluation and understanding of your legal remedies as a franchisee will be dependent on the terms of your franchise agreement and any amendments and modifications that have been made to it. In addition to the express terms of the franchise agreement it is important to evaluate the franchisor’s FDD to ensure that the FDD properly disclosed the terms of your franchise agreement. When dealing with contractual rights your remedies will fall into traditional contract remedies that include breach of contract, fraud, tortious interference with contract and unjust enrichment.

As a franchisee, chances are that the rights set forth in the franchise agreement are much more favorable to the franchisor and not you. However, depending on the facts which require a careful evaluation, you may have substantial rights and legal remedies available to you under the franchise regulations and application of state franchise relationship laws. It is critical to understand that your legal rights and remedies may go far beyond the terms of your franchise agreement.

To learn more about suing your franchisor, what to evaluate and the best approach, click here.

More Information


Back to Buying a Franchise

Let's Talk

With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your brand. Click on the button below or call us at (800) 976-4904.

Top Resources for Franchising Your Business

  • videoImg

    Franchise Sales Compliance Guide

    Are you a franchisor or a part of a franchise sales team? Do you want to learn more about franchise sale compliance and ensure that your sales practices comply with franchise laws and are consistent with best practices? Then this guide is for you. In this guide you’ll learn the... read more

  • videoImg

    The Ultimate Guide to Franchising Your Business

    In this guide you’ll learn the basics of franchising, how to franchise your business, and how to win at franchising. We’ll also take a deeper dive into legal requirements for franchising and why they matter, steps to take before and after you launch your franchise, and even some tips on... read more

  • videoImg

    Franchising vs. Licensing

    When considering expanding a business both franchising and licensing are possible options. In this guide, you'll learn the differences of franchising and licensing and understand how each will affect you. read more

all guides

  • None right now

all videos

  • videoImg

    Franchising Your Business: Advantages & Disadvantages

    Are you considering franchising your business? If so, its important to understand the advantages and disadvantages of franchising your business. Franchising is a legal and business model designed to achieve multi-unit expansion. Compared to organic expansion where you invest in and open multiple locations yourself, franchising allows you to recruit... read more

  • videoImg

    Documents to Start a Franchise

    The documents to franchise your business include the franchise disclosure document (FDD), franchise agreement, operations manual, financial statements, and state specific registration applications. Below we discuss each franchise document in detail. 1. Franchise Disclosure Document Before you can offer or  sell a franchise you are required to issue and disclose... read more

  • videoImg

    Is Your Business Franchisable and Should You Franchise?

    Franchising may be the next big step for your business and represents an opportunity to grow your brand. So, how do you know if franchising is right for you? How do you know if your business is franchisable and, if it is, whether or not you should franchise your business?... read more

all articles

  • videoImg

    Positioning Your Brand to Win at Franchise Sales

    In this webinar, Charles Internicola and Laura Meyer, founder of Joybrand Creative, talk about how to position your brand to win at franchise sales. Some topics include: How franchisors can develop their brand strategy How to differentiate your brand strategy between your targeted end-user customers and prospective franchisees for franchise... read more

  • videoImg

    How to Work With Franchise Brokers and Sell Franchises

    In this webinar, Charles N. Internicola, Esq. and Lisa Welko, CFE of Integrity Franchise Group discuss what it takes to make your brand attractive to franchise brokers and sell to qualified franchisees.  Selling franchises and building a durable franchise system - all comes down to being a "good franchisor," making... read more

  • videoImg

    Leveraging PR & Digital Media to Jumpstart Franchise Sales

    Key strategies to accelerate franchise growth for startup and emerging franchisors In this webinar, franchise attorney Charles Internicola and Nick Powills, founder of No Limit Agency and 1851 Franchise, discuss key strategies to accelerate franchise growth through PR and digital media. Some topics include: Steps franchisors should take when it... read more

all webinars

Let’s Talk

With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your business.

Fill out the following form and we’ll contact you as soon as possible. To reach our team directly, give us a call at (800) 976-4904.

An attorney client relationship is not established by submitting this initial contact information.

closeIcon