A franchise operation can be beneficial for all parties. The franchisee reaps the benefits of branding and support while the franchisor receives a fair price for the franchise sale.
With that being said, disputes about franchise agreements can occur. Outlined below are some of the more common causes of franchise disputes.
When the franchisee feels let down
A franchisee takes on a franchise to ultimately make their business more profitable. A franchise agreement typically offers the use of an already established brand as well as a full support system.
For example, someone from the franchise operation will usually consult the franchisee during the transition to make sure that they get up and running without issues. Occasionally, it doesn’t work out this way and this is when disputes can arise.
If the franchisee feels that they have not received the promised support then they are likely to feel aggrieved. A franchise dispute will almost certainly arise from this.
Another way in which the franchisee may feel aggrieved is if the numbers don’t add up. During negotiations, they may have been promised that they would hit certain numbers. If these numbers fall short, then the business relationship with the franchisor may start to become strained.
When the franchisor feels let down
Many franchise disputes also occur when the franchisee has not lived up to their end of the deal. Generally, there are stipulations within the franchise agreement which mean the franchisee must follow certain protocols in line with the brand. If a franchisee is going off brand or is underperforming, this is likely to result in disputes.
Franchise agreements can be tricky but it is possible to resolve them. This is a nuanced area of law, so be sure to seek legal guidance when addressing a dispute. Contact us today for a free consultation.