How a Franchisee Can Fight Encroachment

Please read on, then contact one of our experienced franchisee litigation attorneys to learn how you can fight back against franchisor encroachment.

What constitutes encroachment to a franchisee?

In almost every franchise agreement, the franchisor provides the franchisee with a protected territory. Encroachment occurs when the franchisor does any of the following:

  • Places a permanent competing unit operated by the franchisor or another franchisee in close proximity to an existing unit
  • Uses technology to sell directly to your customers
  • Places seasonal units too close to yours

For many franchisees, this activity may reduce their ability to earn a profit from their locations. However, the franchisee may have some protections against encroachment.

How does a franchisee prevent encroachment?

As always, the solution to claimed franchisor encroachment is for the franchisee to truly understand – with the assistance of highly competent franchise counsel from our firm – the nature and extent of the territorial protections, if any. These provisions are reviewed three times by a prospective franchisee: First in the Franchise Disclosure Document (FDD), second in the specimen franchise agreement appended to the FDD and third in the actual franchise agreement executed by the parties. It is an all too common occurrence that franchisees will only later come to realize that they had not paid attention to the subject franchise agreement’s territorial provisions before signing the contract. This is why you should keep our trusted legal team on hand throughout the franchising process and the running of your business.

If not expressly precluded from the underlying franchising documents, you – along with your skilled franchising attorney can fight to diminish the franchisor’s profits gained from encroaching on your territory. This can be accomplished through the following means:

  • A direct financial contribution being made by the franchisor to the franchisee being encroached upon
  • A reduction in royalty rates that the franchisee pays to the franchisor
  • Having the new, encroaching franchisee pay a portion of the impacted franchisee’s royalties

Franchisors should be allowed to grow and expand. However, it should never be at the expense of their existing franchisees. Our legal team will employ every means to prevent encroachment and protect your bottom line, so please do not hesitate to give us a call today.

Contact Our Experienced Franchise Lawyer Today

The bottom line is that regardless of the franchise law matter you’re facing, your needs are best served with a dedicated franchise lawyer in your corner. Our goal is to help business owners in Missouri and across the United States reach their maximum potential, and you have our pledge to do the same for you as well. Contact Fortman Spann, LLC online today to schedule your initial consultation. We are here to help you in any way we can.

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