Dealing With Franchise Disputes: Here’s What You Need to Know | Unfortunately, when two parties enter into a franchise agreement, there is the change of things turning out negatively. While both parties may enter into an agreement in good faith, one party may feel that the other party is not holding up their end of the bargain. This article will take a look at franchise disputes and the common reasons behind them. Knowing the reasons that franchisees and franchisors have disputes may help a person avoid this type of legal issue in the future.
A Look at Franchise Disputes
What is a franchise dispute? Many people who are not in the business world are unfamiliar with the term franchise dispute. Who can help someone going through this situation? Feldman & Feldman is a great legal resource that can help people understand the complicated laws and rules that come with franchise disputes.
What does this term mean? A franchise dispute is when a franchisee and a franchisor are having a disagreement or falling out. Franchisee disputes can happen over many different issues, and many times the two parties end up in court. At the first sign of a problem, it is smart to reach out for legal advice and representation. While a franchisee may be business savvy, they likely aren’t up on the rules and regulations of a court of law.
Common Issues Behind Franchise Disputes
Every single day franchisees and franchisors end up in court or mediation. What are the common reasons that these two parties end up in court? A few of the reasons include:
- The franchisee ends up deserting their franchise while still under contract;
- A franchisee may be misusing private client data;
- A franchisee may have misused the franchisor’s private information;
- The franchisee or franchisor may have failed to follow through with the agreed-upon contract terms;
- The franchisee may not be meeting the minimum performance levels in the contract;
- The franchisor may be taking large shares out of the franchisee’s profits;
- The franchisee or franchisor could be manipulating the businesses profit numbers;
- A franchisee may have created a business that competes with the franchise while under a non-compete contract;
- The franchisee may have stopped paying their required franchise fees;
- Either party could be involved in deceptive or misleading behavior;
- Either party may have misrepresented themselves falsely while entering into the legally binding franchise agreement;
- Either party could be accused of reporting or logging sales information incorrectly;
- The franchisee may not be following the agreed upon Standard Operating Procedures; or
- The franchise may have participated in unauthorized use of the franchisor’s legally protected information.
What Parties May Be Seeking in the Dispute
What is the point of a franchise dispute? Likely, the party that filed the dispute wants corrective action taken. They may also be seeking damages, compensation, a specific performance, or the account holding the profits. Often, when the case goes to court, both parties have spent large amounts of time and money on the issue.
What People Need to Know About Franchise Disputes
People need to know that they cannot represent themselves in a franchise dispute and expect their rights to be protected. It is common for these disputes to be settled informally through either mediation or negotiations, but both options should require the assistance of a litigation lawyer.