Franchisees and franchisors have a unique relationship. However, while everyone may be positive immediately after signing the franchise agreement, business relationships can sour quickly as small disputes grow into business-threatening legal disagreements. When this happens, is there any way to terminate the franchise agreement? After all, it is legally binding on all parties.
Basics of a Franchise Agreement
As the name indicates, a franchise agreement pertains to the purchase of a franchise that is generally considered to be a license. The person or company selling the franchise is the franchisor, while the buyer is the franchisee. By signing this document, the franchisee agrees to the terms negotiated by the two parties or as required by the franchisor.
The agreement signed by the franchisor and franchisee operates as a license. The parties’ respective obligations are set out, as well as their rights. For example, the franchisee will now be allowed to use designated intellectual property owned by the franchisor while the franchisor attempts to maintain consistency among all its licensees.
Franchise agreements may also designate how long the relationship will last. However, sometimes the relationship needs to be terminated.
Ending the Franchise Relationship
At the time you finalize the deal for your franchise, everyone might be in agreement. Termination of the franchise relationship may be the last thing on your mind.
However, franchise agreements contain terms and provisions relating to many issues, including dispute resolution and termination of the agreement. In some cases, a franchisee and franchisor with legal disagreements may be able to negotiate a settlement or participate in mediation sessions. If all else fails, the parties may use be forced to terminate the franchise agreement.
Franchisees may sometimes find that the relationship is not working as agreed upon. At this point, you may need to review your options with a business lawyer who knows franchise law.
You May Be Able to Terminate a Franchise Agreement.
However, this is not a step to be taken lightly and without adequate legal advice. If done incorrectly, you may end up on the wrong end of a lawsuit.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. we represent clients throughout South Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, and surrounding communities.