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Can you sue your franchisor for false promises?

On Behalf of | Jul 1, 2024 | Franchise Law |

The franchising model can be an incredible path to business ownership. There are instances when a franchisor might oversell the opportunity.

When disputes arise, parties may negotiate first and devise a solution to the problem. If that does not work, a natural step would be to take legal action. If you, the franchisee, believe false promises made by the franchisor misled you, you may have grounds to sue under federal law.

False promises can be detrimental to businesses

Franchise misrepresentation can occur when a franchisor misrepresents or omits material facts during the pre-contractual negotiations, including, but not limited to:

  • Guaranteed earnings: Franchisors cannot guarantee specific income. What they can provide is realistic performance data based on existing franchises.
  • Exaggerated territory potential: Promises of exclusive territories with high customer density might be false.
  • Misleading support claims: The level of training and ongoing support offered may be significantly less than advertised.

Not every broken promise is grounds for a lawsuit. Still, if a franchisor’s promises significantly differ from reality, and you can prove these promises influenced your decision to invest, you might have a case.

Litigation is an option

Depending on the specifics of your situation, you might have grounds for different lawsuits. These can include fraud, which can be a crime, and breach of contract. You can seek to recover your investment and potential loss of profits from both scenarios.

Legal battles can be expensive and time-consuming but may be necessary. Contact the experienced attorneys at Zarco Einhorn Salkowski for free consultations and more details.