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.
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:
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.
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.
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.
Franchising may be the next big step for your business and brand. So, how do you know whether or not you should franchise your business? How do you know if franchising is right for you? The answer depends on your business, your business goals, your personal goals, your budget and... read more
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
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
Are you a successful business owner? Are you looking for ways to expand your business? If so, this article will provide the answers you need to decide whether franchising your business is the right step for you. In short, franchising allows you, the franchisor, to create a relationship among several... read more
Under federal law, prior offering or selling a franchise in any state, franchisors are required to disclose a franchise disclosure document (FDD) to their prospective franchisees. In addition to federal law certain states, including the franchise registration states, require that franchisors register their FDD with the state. The legal documentation... read more
For very good reasons, the questions of “is my business franchisable?” and “can my business be franchised?” come up often. Assuming that you possess the right mindset and franchise goals (a topic that we discuss in a separate article) there are core franchise factors that either your business must possess... read more
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
One of the biggest issues for emerging franchisors is not having a plan for insurance and system-wide protection. What do emerging brands need to know when they're starting off, who should they rely on, and how can they plan ahead? Get an insurance game plan to protect your franchise system... read more
Key strategies for developing the right logo & trade dress to drive franchise growth with branding and design expert Dan Antonelli. Dan is the author of ‘Building a Big Small Business Brand’ and is the creative director of the branding firm KickCharge Creative. Learn how to drive franchise growth and... read more
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.