A franchise agreement is a contract between a franchisor and a franchisee that outlines the terms and conditions for operating a franchise business. It is a legally binding agreement that protects the integrity of the franchise’s operating system and the brand. In general, a franchise agreement comes to an end when the contract reaches its expiration date and is not renewed. However, certain situations may arise that can lead to the termination of the contract before its due date, including situations when a franchisor breaches the franchise agreement.
The Reasons for Ending a Franchise Agreement
Under a franchise system, there are some situations where a franchisee may seek to terminate the agreement. These situations include the following:
- When the franchisor fails to provide the support and training outlined in the agreement.
- When the franchisor makes misleading or fraudulent claims regarding potential profits.
- When the franchisor does not protect the franchisee’s territory.
- When the franchisor goes bankrupt.
The Steps To Take To End a Franchise Agreement
If a franchisee wants to end their franchising agreement and believes they have a good cause, they still need to follow certain steps to ensure they properly end the agreement. These steps typically include the following:
Review the Franchise Agreement
As a franchisee, you will want to first review the franchise agreement and carefully read the termination clause, which will outline the conditions and requirements for ending the agreement, such as notice periods or associated costs and penalties.
Review the Situation With an Experienced Legal Professional
Before ending a franchise agreement, consider working with an experienced franchise attorney. These legal professionals can review the legal implications of terminating this agreement and help make sure that all the proper procedures are followed.
Offer Written Notice
In general, franchisees will need to provide written notice of their intention to terminate an agreement with a franchisor. This notice will need to include reasons for the termination and the proposed termination date. The requirements and the specific notice period will usually depend on the terms of the franchise agreement and will also depend on the circumstances surrounding the termination.
Other Solutions When the Franchisor Breaches Their Agreement
In addition to trying to get out of the franchise agreement, a franchisee has several other options if the franchisor breaches its agreement. For instance, the franchisee can also pursue legal action to obtain financial damages for their losses or try to get the franchisor to change their ways.
Unfortunately, proving that the franchisor breached the agreement can be challenging. Generally, it requires strong evidence and arguments to show what happened and how the franchisor was at fault. That is why franchisees must keep detailed records and consider contacting an experienced franchise attorney to learn more about their options when they believe a franchisor has breached their agreement.
Contact FortmanSpann Today
FortmanSpann, LLC is a well-established law firm that provides legal assistance to clients facing various franchise and trademark legal issues all over the country. If you are looking for assistance with your franchise legal problems, contact us today to learn more about how our team can help you.