Zarco Einhorn Salkowski, P.A. Zarco Einhorn Salkowski, P.A. 2026-06-05T17:46:19Z https://www.zarcolaw.com/feed/atom/ WordPress /wp-content/uploads/sites/1404858/2020/01/cropped-zarco-siteicon-32x32.png On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[5 Warning Signs Your Franchise Agreement Is Too One-Sided]]> https://www.zarcolaw.com/?p=64455 2026-06-01T15:46:45Z 2026-06-01T15:40:32Z it's written by the franchisor's legal team. That last part matters. Because a franchise agreement is drafted to protect the franchisor. That's not inherently wrong. But there's a difference between a balanced agreement that protects the brand and one that leaves you exposed at every turn.

Key Takeaways

Franchise agreements are written by franchisors, for franchisors. That's the starting point every prospective franchisee needs to accept. The 5 warning signs covered here include:
  • Predatory termination clauses
  • Restrictive transfer rights
  • Vague territory protections
  • One-sided renewal terms
  • Unfair dispute resolution language.
Now, those things don't automatically mean a franchise system is bad. They mean you’re potentially carrying more risk than you should be. Plus, unbalanced agreements compound over time. Seeing that, the most important step you can take is hiring a franchise attorney before you sign anything. Not a general practice attorney. A franchise attorney. The fact is that these agreements are long, dense, and full of language that requires specialized legal knowledge. But the best part is that a qualified franchise attorney will tell you what's negotiable, what's boilerplate, and what's a genuine dealbreaker. Finally, that legal review costs a fraction of your total investment. Skipping it is one of the most expensive mistakes a franchise buyer can make.

The 5 Warning Signs You Need to Watch For on Your Franchise Agreement

1. The Termination Clause gives the franchisor too much power.

Every franchise agreement includes termination language. That's standard. What's not standard — or shouldn't be, is a clause that lets the franchisor terminate your agreement with little notice and minimal justification. Some agreements allow termination for vague reasons like "conduct detrimental to the brand." That phrase can mean almost anything. So, if the franchisor decides they don't like how you're running your business, that language gives them enormous leverage. So ask your franchise attorney to walk you through every termination trigger in the agreement. Pay close attention to how many days of notice you'd receive. Pay attention to whether you get a chance to fix the problem first.

2. Transfer Rights are loaded with landmines.

One of the biggest financial opportunities in franchising is the ability to sell your business someday. But that opportunity can disappear fast if your transfer rights are buried under unreasonable conditions. Watch for agreements that give the franchisor the right of first refusal to buy your business. That sounds reasonable, but in practice, it can suppress the sale price or scare off buyers entirely. Also watch for excessive transfer fees, approval requirements that are purely discretionary, and training obligations (and the cost of them) for buyers that are so burdensome they kill deals before they start. If you can't exit cleanly, you don't really own what you think you own.

3. Territory Protection is vague or non-existent

This one is more common than it should be. Some franchisors grant you a defined territory. Others grant you something that looks like a territory but is full of exceptions. The franchisor might reserve the right to sell through alternate channels like e-commerce, wholesale, and/or other locations within or near your area. In a nutshell, if your territory isn't precisely defined and legally protected, a competitor could show up in your backyard. That competitor might even be another franchisee from the same system. With that in mind, make sure you read the territorial language carefully. Have your attorney look for exceptions, carve-outs, and reservation clauses. If the territory section is vague, ask the franchisor to clarify in writing. If they won't, that tells you something.

4. Renewal Terms favor the house. Not you.

You build the business. You grow the customer base. Then renewal time comes around. Some agreements may let franchisors impose entirely new terms at renewal. That could mean higher royalties. It could mean updated buildout requirements that cost you six figures. It could even mean signing the current version of the franchise agreement, which may be substantially different from what you originally signed. The way we look at it is that you've invested years and real money into that business. The renewal terms should reflect that. In essence, if the agreement doesn't give you reasonable renewal rights on fair terms, you're essentially operating under a short-term lease with no guarantee the landlord keeps you on.

5. The Dispute Resolution section in your franchise agreement can lock you out.

When something goes wrong between a franchisee and a franchisor, how disputes get resolved matters enormously. Some agreements require arbitration — which can be fine. But the details matter. Where does the arbitration take place? If you're in Florida and the agreement requires disputes to be resolved in the franchisor's home state, that's an immediate financial and logistical disadvantage. Also look at whether you're waiving your right to a jury trial. Look at whether class action participation is prohibited. Look at whether the agreement limits the types of damages you can seek. These provisions don't seem important when everything is going smoothly. They matter a great deal when things go wrong. Have your franchise attorney explain them to you.

The Bottom Line

A franchise agreement is a long-term legal commitment. Most run 10 years or more. You're going to live inside that document. That said, one-sided agreements don't always signal a bad franchise opportunity. But they do signal that you need expert eyes on that contract before you sign. That’s why you need to hire an experienced franchise attorney. Not a general business attorney. A franchise attorney. This is a specialized area of law, and the nuances matter. The right attorney won't just flag problems. They'll tell you what's negotiable, what's standard, and what's a genuine red flag. And that clarity is worth every dollar you spend on it.]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[Franchisees beware: That DoorDash order may cost you more than you think]]> https://www.zarcolaw.com/?p=64416 2026-05-18T19:59:24Z 2026-05-18T19:49:21Z business owners know that their business needs to evolve with the market. This holds true in most industries, but few can change as frequently as the restaurant business. One of the most recent evolutions is the growth of delivery within almost all types of dining establishments. From fancy restaurants to drive through staples, the use of delivery services like DoorDash, Uber Eats and Grubhub have become an important part of maintaining their customer base.  The use of these third party delivery services boomed during the pandemic and continues to gain momentum. These services can seem like pure upside. More orders, wider reach and stronger brand visibility. For many franchisees, these types of sales also bring a quiet margin squeeze that gets worse over time. The pressure often starts with franchisor fees tied to delivery revenue and can accelerate when franchisees raise delivery pricing to cover those fees.

Where the margin pressure begins

Third party delivery services typically charge the restaurant a commission or service fee. The franchisor may also charge royalties on sales, including through delivery services. The exact amount and structure to these payments depends on the franchise agreement. Some take a percentage of the overall cost, which could include any addition made to the price of items to help compensate for the delivery fee. Each layer reduces the net profits.

Why delivery menu pricing often runs higher

As noted, many franchisees respond by setting a higher delivery menu price than the in store price. The goal is straightforward: recover the platform commission plus any franchisor percentage fees without raising base pricing for dine in guests. The reality can be sobering: a larger cut to the franchisor.

Franchise agreement language can change the math

The biggest surprise tends to come from how the franchise agreement defines “gross sales” or “gross revenue.” Some agreements capture all amounts charged to the customer, including delivery fees, service charges, packaging fees and convenience fees. Others exclude pass through amounts, or define delivery fees as non revenue items. Depending on the language of the agreement, a franchisee can end up paying royalties on the very markup added to cover delivery costs. That can turn a defensive pricing move into an additional franchisor fee base. These types of arrangements can result in massive loss for franchisees and are not uncommon. This is one of many issues in a recent case involving Franchisee Gold Coast against Franchisor Jack in the Box. 

Key takeaways for franchisees

DoorDash, Uber Eats, Grubhub and other third party delivery service providers can drive volume, yet the economics depend on layered fees plus contract definitions. Franchisees should move forward with such agreements cautiously. A careful read of the franchise agreement can mean the difference between profitable growth and profit leakage.]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[Navigating Commercial Real Estate Litigation: Protecting Your Franchise Location Rights]]> https://www.zarcolaw.com/?p=64413 2026-05-15T14:59:17Z 2026-05-15T14:58:27Z Key Takeaways of Navigating Commercial Real Estate Litigation Your lease is a legal document, not a formality. Most franchisees spend more time reviewing the FDD than their commercial lease. The lease governs your location rights, renewal options, and financial exposure in a dispute. That said, you need to remember to give it the same scrutiny you give everything else you sign. It should be noted that your franchisor is not your advocate in a landlord dispute. Franchisors have their own relationships with landlords and their own system-level priorities. Translation: When a real estate conflict develops, their interests and yours can diverge fast. You need independent, highly-qualified legal counsel — someone who represents you, not the brand. What’s my point? The costliest mistakes happen before litigation starts. Franchisees miss notice deadlines. They sign amendment language that waives rights they didn't even know they had. So, by the time a franchise attorney gets involved, the damage is done. Tip: If a dispute is developing, you need to get qualified legal assistance early. Finally, experience shows that location conflicts between franchisees and landlords are more common than most people think — and more damaging than most people anticipate.

The Lease Is a Business Asset. Treat It That Way.

Franchisees are told to focus a lot of their due diligence on the Franchise Disclosure Document (FDD). That's appropriate. But the commercial lease deserves equal scrutiny. That’s because your franchise business location is not just a place to operate. It's a foundational business asset. The lease governs how long you can stay, what you can spend, and what happens if things go sideways. A bad lease can undermine even the most profitable franchise operation.

Where Franchise Location Conflicts Actually Come From

In my experience, the most common friction points fall into a few categories. Property maintenance is the first. For instance, who is responsible for HVAC repairs? What about structural issues? Parking lot conditions? These questions seem straightforward until something breaks and the landlord's interpretation of the lease differs from yours. The fact is, disputes over maintenance responsibilities can drag on for months and cost franchisees significant money in lost revenue, out-of-pocket repairs, or both. Lease renewal is the second thing. This is where things can get particularly painful. In this case, a franchisee builds a successful location over 3 or 4 years. The renewal date approaches. Suddenly, the landlord wants a significant rent increase. Or wants to restructure terms. Or simply isn't cooperative about the timeline. That means if your franchise agreement requires you to maintain that location, you're negotiating from a position of weakness. Unauthorized alterations are the third issue. Franchisors frequently mandate remodels or equipment upgrades. Sometimes those changes conflict with lease restrictions on alterations. Now you're caught between two contracts; your franchise agreement and your lease, and neither party is willing to absorb the cost.

What Happens When Disputes Escalate? Commercial Real Estate Litigation.

Most landlord-franchisee disputes start as conversations. A phone call. An email exchange or two. A notice letter. Some get resolved there. Others don't. I know that’s a lot to take in but hear me out. Because when disputes escalate to litigation, the stakes change dramatically. Franchisees can face claims of lease default, threats of eviction, or demands for damages. And landlords have been known to use litigation as leverage to force renegotiation. Either way, a franchisee without qualified legal representation is at a serious disadvantage. This is where having a franchise attorney with commercial real estate litigation experience matters enormously. But not just any business attorney. You need someone who understands the intersection of franchise agreements, lease obligations, and the litigation dynamics that come with commercial real estate disputes specifically. Fortunately for you, [nap_names id="FIRM-NAME-1"] handles these situations regularly. Their commercial real estate disputes practice covers the full range of conflicts franchisees can encounter — from lease negotiation breakdowns to contested maintenance obligations to landlord interference with franchise operations. They work with franchisees who need to protect their location rights when conversations stop working and legal action becomes necessary.

The Pre- Commercial Real Estate Litigation Mistakes That Cost Franchisees

If I've learned one thing watching franchisees navigate real estate disputes, it's this: most mistakes happen before the franchising attorney gets involved. Franchisees respond to landlord demands without legal review. They sign amendment language that waives important rights. They miss notice deadlines in the lease. They assume their franchisor will step in and advocate for them. That last assumption is the most dangerous. Your franchisor has its own relationship with the landlord. They have a system to protect. Their interests and yours don't always align when lease disputes arise. In some cases, franchisors have declined to support franchisees in real estate disputes altogether. With those things in mind, you need your own counsel. Not theirs.

Protect Your Franchise Location Before a Problem Develops

This may sound obvious, but the best time to think about commercial real estate litigation is before you're in litigation. Here are the steps to take:
  • Review your lease with a franchise attorney before you sign it
  • Understand the renewal provisions
  • Understand the maintenance language
  • Understand what happens if the franchisor requires alterations your landlord might resist
  • Document every communication with your landlord
  • Keep records of maintenance requests, repair timelines, and any verbal agreements
  • Know your notice requirements
FYI: Most leases have strict deadlines for exercising renewal options or raising disputes. Missed deadlines can forfeit rights you didn't even know you had. And if a dispute is already developing and the landlord is being unresponsive, if renewal terms look unreasonable, or you're getting threatening correspondence — don't wait. Get qualified legal help early.

The Bottom Line

Your franchise location is likely your largest operational asset. It took months to find. It cost significant money to build out. It's the foundation of everything your business does. Protecting it requires the same diligence you bring to every other part of your franchise investment. Real estate disputes don't resolve themselves. The franchisees who protect their location rights are the ones who take the threat seriously, and get the right legal help early.]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[The “Item 19” Reality Check: What the Numbers Don’t Tell You]]> https://www.zarcolaw.com/?p=64349 2026-05-01T18:41:04Z 2026-05-02T08:45:48Z Franchise Disclosure Document (FDD) and flip straight to the Item 19 numbers. There are lots of revenue figures and maybe a breakdown by quartile. You feel you have enough data to at least start building a business plan. Slow down. Read this article first.

On Building Your Franchise Around Item 19 Numbers

Before you build a business plan around those numbers you see on the Item 19 portion of the FDD, you need to understand something important. Item 19 is one of the most misunderstood documents in all of franchising. Now, a franchise attorney can confirm that it's legally compliant. What they can't do is tell you whether those numbers make sense for you in your unique situation. That's a different conversation entirely.

What Item 19 Actually Is

The Financial Performance Representation, or FPR, is an optional disclosure that franchisors can include in their FDD. Not all franchisors provide one. When they do, the format varies widely. For instance, some franchisors show gross sales, while others show net income. Some break data down by quartile. Others present a single average figure and call it a day. That being said, here's what the law requires: the data must be accurate, substantiated, and presented without material omission. Your attorney will verify that the numbers in Item 19 are legally defensible. But legal compliance and business viability are two entirely different things.

The "Average Gross Sales" Problem

The most dangerous number in Item 19 is the average. After all, it sounds straightforward. Just add up the sales figures from all reporting locations, divide by the number of locations, and you have your benchmark. Except you don't. The fact is that averages hide the spread. For example, if one location generates $2.1 million per year and nine struggling locations generate $400,000 each, the average is $570,000. That number tells you almost nothing useful about what you'd actually earn yourself. Yet many would-be franchisees do just that. Big mistake. What you really need is the full distribution of performance across locations. More specifically, you need to know how many locations fall below the average. In fact, experience shows us that in a good number of franchise systems, sometimes the majority of locations tend to underperform the mean. That's not manipulation. That's just math. But if you're planning your business around hitting the average, you need to understand the odds you're facing. That’s why you need to ask your franchise attorney to flag which locations were excluded from the data. More specifically, new units often get left out. Closed units frequently disappear. What remains may be a curated snapshot rather than a complete picture.

The Hidden Cost Problem In Item 19 Numbers

Gross sales are not profits. That seems obvious. But many prospective franchisees, excited by a strong revenue figure, make the mistake of reverse-engineering their net income from the top line without accounting for the full cost structure. Given that, you need to consider what typically sits between gross sales and actual take-home income. In particular, royalty fees usually run 5 to 9 percent of gross revenue. Marketing fund contributions add another 2 to 4 percent. Then there's rent, which in a retail or food service model can consume 10 to 15 percent of sales on its own. Labor, cost of goods, insurance, utilities, debt service on your initial investment. Add it all up. By the time you've worked through a realistic P&L, a location doing $750,000 in gross sales can sometimes produce very little actual income for the owner. Bottom line: Item 19 won't show you that math. It wasn't designed to.

Working Capital Is the Number Most People Miss

Here's where prospective franchisees get into serious trouble. They fund the startup. They cover the franchise fee, the buildout, the equipment, the initial inventory. They open the doors. Then they discover that the cash flow in the early months of a small business can be brutal. That’s why most franchise systems require 3 to 6 months of working capital as a cushion. Some of the more honest franchisors disclose this expectation clearly. Others bury it in general language. Regardless of what the FDD says, the real-world requirement is often higher than projected. Why? Because sales ramp up slowly. Fixed costs never do. In reality, your rent starts on day one, your staff needs to be paid, and your royalties kick in immediately. But customer volume takes months to build. The gap between your expenses and your revenue during that ramp-up period is your working capital drain. If you haven't funded it adequately, you're in a cash crisis before your business has found its footing. Unfortunately, Item 19 cannot warn you about this. The numbers it shows are from established locations. Your first twelve months probably won't look like their numbers. Plan accordingly.

What to Do With The Item 19 Numbers

None of this means Item 19 is worthless. Used correctly, it's valuable. First, start with the validated data. Have your franchising attorney confirm the legal compliance and identify any gaps in the reported dataset. Understand who was included and who wasn't. Then go further. Pull the list of current franchisees from Item 20 of the FDD. Call them. Ask about their actual costs, their ramp-up timeline, and whether their experience matched what Item 19 suggested. And be sure to ask them specifically about working capital needs. Ask what they wish they had known before opening. Next, build your own proforma from the bottom up. Don't start with the gross sales figure and work backward. Start with realistic cost assumptions and stress-test multiple revenue scenarios. Finally, engage the services of a franchise attorney early. Not just to confirm legal compliance, but to help you understand what questions to bring to a financial advisor and what due diligence gaps need closing before you sign.

The Number That Really Matters

Item 19 shows you what franchisees have sold. It doesn't show you what they've kept. It doesn't show you what they've struggled through in the early months. It doesn't show you the locations that didn't make it. A legally compliant Item 19 and a financially sound investment are not the same thing. The difference comes down to how thoroughly you perform your due diligence before you sign.]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[Franchisees: Options if franchisor opens new unit in your territory]]> https://www.zarcolaw.com/?p=64347 2026-04-29T18:53:43Z 2026-04-29T18:53:43Z recent case involving Applebee’s franchisees seeking legal relief after the franchisor began opening dual-brand Applebee and IHOP locations within existing areas of exclusivity is catching media attention. The franchisees argue that the franchisor is cutting into their profits by opening these combination units within their territory.  The problem is not a new one. Franchisees have experienced similar issues in the past. Those who find themselves in a similar situation are wise to take action to protect their interests. Before choosing a response, it is important to confirm the core facts. Review the language in the agreement about the territory and check to see where the new unit falls within that area. Document the franchisor notice process and the timeline for the new unit as well as the projected competitive overlap. With this information gathered and ready, franchisees can use the legal system to help with two main goals: protect their franchise while stopping the opening of the new unit. 

Injunction to stop franchisor from ending franchise agreement

Some franchisors respond to a territory dispute with default notices, nonrenewal threats or termination notices. An injunction may be the fastest tool to prevent termination while the underlying dispute proceeds. Courts may review various factors, but four common examples often include: likelihood of success on the merits, irreparable harm, balance of hardships and public interest. In franchise cases, irreparable harm arguments often focus on loss of goodwill, customer relationships and the inability to recapture market position. Contract provisions on termination, cure periods, notice requirements, good faith and fair dealing can play a central role in these decisions. The request for relief through an injunction must be supported by evidence, not conclusions. A franchisee should expect the franchisor to fight back. Prepare careful documentation to support your case.

Injunction to stop opening of the new unit

If a new unit is imminent, an injunction can target the opening itself. This remedy is fact intensive. Some agreements expressly allow encroachment through alternative channels. Some provide exclusive territories with defined boundaries. Others disclaim exclusivity entirely. Review your arrangement so you have a clear understanding of what is and is not allowed. Look for clear territory language, express exclusivity, a defined radius, a noncompete covenant running against the franchisor or documented precontract representations to strengthen the claim.

Other options

Although it is wise to move forward and prepare for potential litigation, this is only one path towards a resolution. Encroachment within the franchise world is a serious, and well studied, issue. Many disputes resolve through contract interpretation, negotiated adjustments and financial offsets. The best path depends on timeline, contract leverage, local franchise statutes and the franchisee relationship goals. Before choosing a strategy, confirm what the agreement actually promises, then sequence the response to protect rights without triggering avoidable default claims. This could include the following pathway:
  • Issue a formal notice of breach, request cure and take steps to reserve rights  
  • Demand documents on site approval, territory analysis and system exceptions  
  • Propose remedies such as relocation, delayed opening, royalty relief, marketing credits and boundary adjustment  
  • Evaluate arbitration clauses, venue clauses and injunction carveouts  
  • Consider a measured public-facing plan to protect goodwill without defamation risk
After these steps, decide whether to pursue emergency relief, a standard breach claim, a statutory franchise claim where applicable or a business resolution. The opening of a second unit inside a franchisee territory can create immediate damage and long term brand disruption. The franchisee options turn on contract language, proof of encroachment and actual harm. Early documentation, disciplined compliance and timely legal action create the best position for either injunction relief or a negotiated solution. Those who are considering action can reach out to our firm, we offer free consultations and can help you get a better understanding of your options. ]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[What You Need to Know About Non-Compete Clauses After You Leave a Franchise]]> https://www.zarcolaw.com/?p=64340 2026-04-28T17:55:10Z 2026-04-24T20:32:09Z What Non-Compete Clauses Actually Say Every franchise agreement contains them. They go by different names — post-term restrictive covenants, non-solicitation clauses, competitive restrictions. The language varies. The intent doesn't. That said, the franchisor's goal is simple: prevent you from competing against them after you leave. I guess you can’t blame them. With that in mind, here's what a typical clause looks like in practice. You exit the system. For the next two years, you cannot operate a "similar" business within a 25-mile radius of your former location. Sometimes the radius is bigger. Sometimes the time period is longer. Sometimes "similar" is defined so broadly it covers almost any related business you could think of. That's a serious restriction. Especially if franchising, or that specific industry, is what you know best.

Why Franchisors Write Them This Way

Let's be fair for a moment. Franchisors invest heavily in training their franchisees. They share proprietary systems, customer databases, operational playbooks, and trade secrets. The argument for a non-compete is legitimate on its face. They don't want to train their future competition. Understood. But there's a gap between protecting legitimate business interests and writing clauses so aggressively they functionally trap you. And many franchise agreements can cross that line.

The Enforceability Question in Non-Compete Clauses

Here's the critical thing most franchisees don't know when they sign. Non-compete clauses are not automatically enforceable. Experience tells us that courts across the country look at these clauses with real scrutiny. Judges tend to ask specific questions.
  • Is the time restriction reasonable?
  • Is the geographic scope reasonable?
  • Does the restriction go beyond protecting a legitimate business interest?
When the answer to any of those questions is "no," courts do have the power to limit or completely void the non-compete. California, for example, renders most non-competes unenforceable as a matter of state law. North Dakota and Oklahoma have similar protections. Even in states that generally enforce these clauses, courts have pushed back on restrictions they consider excessive. NOTICE: As of July 1, 2026, the State of Virginia has enacted a law prohibiting non-compete clauses in franchise agreements entered into after that date. This marks a significant shift in franchise law and further highlights how enforceability depends heavily on state-specific legislation. Of course, the legal landscape is not uniform. Where your franchise was located matters enormously. Finally, which state’s law applies to your agreement is also important, since it’s governed by the terms outlined in your franchise agreement.

The "Blue Penciling" Reality

Some courts don't just void an unreasonable non-compete. They rewrite it. This is called "blue penciling." In this case, a judge decides the two-year restriction should really be one year. Or the 25-mile radius should be 10 miles. The clause survives, just in a modified form. That sounds like a partial win for the franchisee. Sometimes it is. But you still end up restricted. You still can't operate freely. And you still went through expensive legal proceedings to find out where the lines are. The better strategy is understanding what you're signing before you sign it — not litigating it on the back end.

What Franchisees Often Miss

There are a few specific things you may miss that are worth highlighting. First, the definition of "competing business" is often written in the franchisor's favor. Deliberately so. For example, if you ran a fitness franchise, some franchise agreements could theoretically prevent you from opening any fitness-related business — even one that looks nothing like your former franchise concept. Interestingly enough, the non-compete often applies even if the franchisor terminated you wrongfully. Think about that. You get pushed out unfairly, and the clause still runs. Courts don't always agree with that outcome, but getting there takes a legal fight. And finally, some agreements extend non-compete obligations to your immediate family members. Spouses. Adult children. That's not common, but it exists. Read carefully.

What You Should Do

This isn't about scaring you away from franchising. It's about going in with your eyes open. Before you sign any franchise agreement, have a qualified franchise lawyer review the post-term restrictions specifically. Understand exactly what you're agreeing to. Ask the franchisor to negotiate the scope if it feels excessive. Some will. Some won't. Their response often tells you something. And if you're already in a dispute involving a non-compete…whether you've been terminated or you're planning your exit, get legal counsel before you make any moves. The clause you ignored on page 47 of your franchise agreement may be the most important sentence in the whole document. Don't find that out the hard way.

Frequently Asked Questions

Can a franchisor enforce a non-compete against me even if they terminated my franchise without good cause? Possibly. Many agreements are written so the non-compete runs regardless of who ended the relationship or why. Some courts have refused to enforce these clauses in wrongful termination situations. It depends on your state's laws and the specific facts of your case. What happens if I violate a non-compete clause after leaving my franchise? The franchisor can sue you for breach of contract and seek an injunction to shut down your new business — sometimes before you've had a full hearing. They can also pursue monetary damages. Don't assume the franchisor won't act. Many do. Can I negotiate the non-compete terms before I sign the franchise agreement? You can try. Some franchisors are more flexible than they let on, especially if you're a strong candidate. The time to negotiate is always before you sign. Never after you’ve sent the paperwork to franchise headquarters.]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[What are options for resolution when a franchisee has a dispute with a franchisor?]]> https://www.zarcolaw.com/?p=64261 2026-04-06T19:13:25Z 2026-04-06T19:13:25Z a franchise agreement is working, it can feel like a well-oiled machine — clear standards, steady support and a shared goal of growing the brand. But when a dispute arises between a franchisee and a franchisor, that momentum can stall fast. Questions about fees, territory rights, marketing obligations, supply requirements, performance standards or renewal terms can quickly shift from frustrating to financially serious. The good news is that most franchise disputes do not start — or end — in a courtroom. Franchise agreements and franchise laws often outline practical paths for resolving conflict, and choosing the right approach early can protect your business, preserve the relationship and reduce cost and downtime. In this post, we will walk through the basic resolution options franchisees typically have, from informal negotiation to mediation, arbitration and litigation, along with potential remedies.

Option 1: Information negotiations 

In an informal negotiation between a franchisee and a franchisor, the parties typically start by identifying the specific issue, clarifying what the franchise agreement and operating standards require and separating facts from assumptions. Ideally, each side will state its goals and constraints in active, business-focused terms. It is also important to share relevant documents and performance data to keep the discussion grounded.  These discussions should also explore options that address underlying interests, which may include revised training, a corrective action plan with clear deadlines, temporary fee relief, marketing support, territory adjustments where permitted or an agreed interpretation of disputed provisions. The parties can then test proposals against practical realities, document any commitments in writing and set measurable checkpoints to confirm follow-through.  If a resolution is not possible, it is helpful to review next steps, such as escalation to senior leadership or mediation, while preserving the working relationship and limiting disruption to customers.

Option 2: Mediation, arbitration and litigation

If negotiations fail, the parties may move through mediation, arbitration and litigation in escalating order depending on what the franchise agreement requires. In mediation, a neutral mediator facilitates negotiation and helps both sides identify interests, test settlement options and draft a voluntary resolution, but the mediator does not impose a decision. Many find mediation a favorable starting point due to its cost and privacy.  If mediation fails or the contract mandates it, the parties may proceed to arbitration, where an arbitrator (or panel) hears evidence and arguments and then issues a decision that is usually binding and enforceable, with limited grounds for appeal. If the dispute is not subject to arbitration or if a party seeks court intervention for specific issues such as injunctions, litigation places the conflict in court. During litigation, formal procedures govern discovery, motion practice and trial, and a judge or jury delivers a ruling that either side can appeal. Throughout the process, the franchise agreement’s dispute-resolution clause, governing law and venue provisions typically shape which path applies and how quickly the parties can reach a final outcome.

What remedies are available?

Remedies depend on contract language, statutory rights, proof, causation and attempts at mitigation. They can often include monetary relief such as damages for lost profits, fee reimbursement and chargebacks of improper assessments as well as equitable remedies like injunctions to stop wrongful action. When facing a dispute, a franchisee should analyze agreement terms, disclosure documents, state franchise protections and evidence quality to determine the best course of action. Early action helps to preserve remedies. A well-chosen pathway can resolve disputes without losing the business, the brand rights or the ability to recover losses. Franchisees do not need to work through these disputes on their own. We offer free consultations and can help you determine the best course of action for your situation.]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[Top 5 Reasons to Have a Franchise Lawyer on Your Side]]> https://www.zarcolaw.com/?p=64255 2026-04-03T16:20:35Z 2026-04-03T16:14:54Z 1. The Franchise Disclosure Document Is 200+ Pages of Legal Language The Franchise Disclosure Document (FDD) isn't meant to be a casual read. It's a federally mandated disclosure document packed with 23 items covering everything from the franchisor's litigation history to audited financials to franchisee obligations. Most franchise buyers read it once, get overwhelmed, and tend to get laser-focused on the earnings claims (if they’re provided). That's a mistake. A franchise lawyer reads and sometimes writes FDDs for a living. They know what to look for in Item 3 (litigation history). They understand what's buried in Item 19 (financial performance representations). They can also tell you what's missing, because what's not disclosed is often just as telling as what is. That’s why you need someone who can translate the legal language into plain business reality. And that's what a franchise lawyer does.

2. The Franchise Agreement May Be Negotiable, But Not Without Help

Here's something most franchise buyers don't realize. The franchise agreement can sometimes be negotiated. Now, not every franchisor will move. But some will, on things like territory size, renewal terms, and transfer fees. The problem is, you won't know which provisions are negotiable unless you have a franchise lawyer at the table who's done this before. Going into a franchise agreement negotiation without legal counsel is like playing poker without knowing the rules. You'll fold when you should push back, and you'll miss leverage you didn't know you had. A seasoned franchise attorney knows where the soft spots are. They've reviewed hundreds of agreements. They know the difference between boilerplate language and terms that genuinely disadvantage you. That knowledge is worth every dollar of their fee.

3. Having a Franchise Lawyer on Your Side With Litigation Expertise is a Non-Negotiable if Things Go Wrong

Let's talk about the uncomfortable reality of franchising. Sometimes franchisors breach their agreements. They encroach on your territory. They impose new fees not disclosed in the FDD. They terminate your franchise without proper cause. They make verbal promises during the sales process that disappear once you're locked into your agreement. When that happens, you need more than a general business lawyer. You need a franchise lawyer with serious litigation experience. That’s where Zarco Einhorn Salkowski, P.A. stands out. The firm excels at representing franchisee clients in state and federal courts and in arbitrations and mediations throughout the United States. In fact, the franchise lawyers at Zarco Law have pursued cases against some of the biggest names in franchising. In addition, they worked with McDonald's, helping the franchisor shape their Franchisee Bill of Rights. The firm has achieved landmark victories and precedent-setting decisions that have shaped the interpretation of franchise, licensing, and commercial contracts in both state and federal courts. That's the kind of firepower you want on your side. Not just after a problem explodes, but before you sign, so you understand exactly what your rights are and what protections are in place if a dispute ever arises.

4. You're Up Against a Legal Machine. You Need One Too

Think about who's on the other side of your franchise agreement. The franchisor that has in-house legal counsel, and usually, outside law firms on retainer. Plus, their franchise agreement was drafted by lawyers whose job is to protect the franchisor. Not you. Their multi-page 10-year franchise agreement was written to their advantage. Suffice to say, having experienced franchise lawyers in your corner helps level the playing field between business owners and powerful adversaries. And that's the whole point. You're not a corporation. You're an individual franchise buyer writing a six-figure check. You deserve representation that matches the sophistication of the entity you're contracting with. Make sense? So, don't walk into a complicated, franchisor friendly legal negotiation unarmed.

5. The Cost of NOT Having a Franchise Lawyer on Your Side is Always Higher

Franchise lawyers aren't free. But consider the alternative. Because:
  • A poorly reviewed FDD leads to a bad investment decision
  • A missed red flag in the franchise agreement costs you years of margin
  • A territorial dispute without legal backing leaves you with no recourse.
  • Excessive, required remodeling costs can seriously hurt your bottom line
  • A wrongful termination without a litigator in your corner ends your franchise business entirely
Given these points, the attorney's fee looks a lot smaller once you understand what's sitting on the other side of the scale.

The Bottom Line

Before you sign a franchise agreement, before you hand over your franchise fee, before you commit your savings and your livelihood to a franchise system, get a franchise lawyer involved. Not just any lawyer. A franchise lawyer. One who knows the FDD inside and out, has negotiated franchise agreements, and has the litigation background to back you up if the relationship goes sideways. That's not pessimism. That's how smart franchise buyers protect themselves.

Frequently Asked Questions

Question: My territory looks protected in the sales presentation. Do I still need a review? Answer: Presentations and contracts are two different things. Territory language is one of the most disputed areas in franchising. Verify protection in writing — not in slides. Question: The franchise is large and established. Does that make legal review with a franchise lawyer less important? Answer: The bigger the system, the more refined their agreement usually is, and the more it favors them. Size is not a substitute for legal review. Question: What happens if the franchisor violates the agreement? Answer: Your options depend on what's in the contract. Some agreements force arbitration. Others limit damages. You find that out during review. Not during a dispute. Question: Do I really need a franchise lawyer if the franchisor says the agreement is standard? Answer: "Standard" means standard for them. That document was written to protect the franchisor. A franchise lawyer reviews it to protect you.]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[Licenses and Permits Franchisees Need Before Opening]]> https://www.zarcolaw.com/?p=64213 2026-03-25T19:32:40Z 2026-03-26T15:10:00Z Why Licenses and Permits Matter More Than You Think as a Franchisee The permits and licenses that franchise owners need aren't glamorous. They're definitely not covered in the franchisor's glossy discovery day presentation. But they're mandatory, they take time, and they cost money. It’s the price of going into business. That being said, here's what you need to know about the mandatory licenses and permits you’ll need as a franchisee to get your business up, running and legal. But there’s a little issue. Franchisors sell systems. They sell proven models, brand recognition, and operational support. What they often don't emphasize clearly enough is that you — the franchisee, are responsible for obtaining the licenses and permits required to legally operate in your locality. And if you miss one and open your franchise anyway, you may be exposed to fines, forced closures, and in extreme cases, potential legal liability. That's not a hypothetical. It happens. And it can happen to well-meaning franchisees who simply didn't know what they didn't know. Let's fix that.

The 8 Core Licenses and Permits You'll Likely Need For Your Franchise Business

  1. Business LicenseThis is the foundational document. Most cities and counties require any operating business to hold a general business license. It's essentially your government-issued permission slip to conduct commerce in your jurisdiction. The process is usually straightforward, but "usually" is doing a lot of work in that sentence. That's because local, county and state fees vary wildly. Renewal timelines differ. For example, some municipalities have additional registration requirements layered on top. So don't assume your franchisor's experience in another state maps to your specific city hall.
  2. Employer Identification Number (EIN)This number is technically issued by the IRS, not a local government. But you need it before you hire anyone or open a business bank account. If you're treating this as an afterthought, don't. Again, no bank will allow you to open a business account without it.
  3. Zoning and Land Use PermitsYour location needs to be zoned for your type of business. Retail food concepts. Personal services. Fitness studios. Each carries different zoning classifications. And they vary widely by state and locality. With that in mind, you need to know where franchisees sometimes get burned: a franchisor may approve a location based on size, visibility, and traffic counts — without fully verifying local zoning compliance. That due diligence is ultimately on you. Bottom line? Confirm everything I mentioned above with your municipality before signing your lease, not after.
  4. Certificate of OccupancyBefore customers walk through your door to spend their money with you, your physical space needs to be certified as safe and compliant with local building codes. In other words, if you've done a build-out or significant renovation — and most franchise openings involve one, you'll need inspections and a certificate of occupancy before you can legally operate. Be sure to build this into your opening timeline. Inspections get delayed. Inspectors find issues. Build-outs run long. A rushed certificate of occupancy process is a common cause of delayed grand openings.
  5. Health and Food Safety PermitsOperating a food-related franchise concept? If so, health department permits are required before you serve a single customer. In most cases, inspections will cover your kitchen setup, food storage protocols, sanitation systems, and staff certifications. In addition, many cities require individual food handler certifications or maybe even a certified food safety manager on staff. Check your state and local requirements. Because they don't always match.
  6. Seller's Permit or Sales Tax LicenseIf you're selling taxable goods or services, most states require a seller's permit or sales tax license. This registers you to collect and remit sales tax. Operating without one isn't just an oversight — it's a compliance violation with real financial consequences. And it's something you don't want to spend your valuable time dealing with.
  7. Signage PermitsYou want your sign up. Your franchisor has brand standards. Your landlord has preferences. And your local municipality has rules. These rules can be extremely aggravating. In essence, local signage permits govern size, placement, lighting, and sometimes even color. Historic districts and shopping center management agreements add additional layers. Given those things, you need to start this process early. Sign fabrication and installation take time, and permit approvals can drag on for weeks.
  8. Professional and Industry-Specific LicensesDepending on your franchise category, you may need specialized licensing. Home services franchises often require contractor licenses. Healthcare-adjacent franchises may need state-level professional certifications. Childcare franchises face extensive regulatory requirements. Finally, financial or legal service concepts carry their own compliance frameworks. Given these points, your franchisor should provide guidance here. But verify it independently. Regulatory requirements change, and your franchisor's operations manual may not reflect the most current requirements in your state. So, ask.

The Practical Reality Concerning Licenses and Permits All Franchisees Need

You need to start the permitting process earlier than you think necessary. That’s because permit timelines are notoriously unpredictable. A 30-day estimate can become 90 days without warning. Next, be sure to build permitting costs into your pre-opening budget. Fees add up fast — particularly in high-cost metropolitan areas like Boston and Miami. Also, you need to talk to a good number of existing franchisees in your system about their permitting experience. Ask them specifically about surprises. What took longer than expected? What cost more than they were told? And work with a franchise attorney who knows about all the permits and licenses you’ll need to open your new franchise business. Remember, permitting isn't where you want to rely solely on your franchisor's support team. Finally, the permit stack between signing your franchise agreement and legally opening your doors is real. But it's manageable, if you take it seriously early in the process. Don't let paperwork be the reason your grand opening gets delayed or derailed entirely. Get ahead of it.]]> On Behalf of Zarco Einhorn Salkowski, P.A. <![CDATA[What rights does a franchisee have if the franchisor sells to a new owner?]]> https://www.zarcolaw.com/?p=64211 2026-03-23T19:09:23Z 2026-03-23T19:09:23Z A shift in franchise ownership is not uncommon. Just recently, the owners of senior-focused home care providers A Place At Home sold their franchise to an international home care services provider. When these deals move forward, franchisees face a shift in legal relationships, operational expectations and financial exposure. Whether selling to another corporation or a private equity firm, the transition in ownership can directly impact the relationship between the franchisee and the franchisor. Franchisees who find themselves in this situation are wise to become familiar with the process and their rights as they navigate this new relationship. 

Review franchise documents

Most franchise agreements allow transfer of the franchisor’s rights to a new owner. Many agreements waive franchisee consent and limit notice requirements. A purchaser generally steps into the franchisor role and gains the right to collect royalties, enforce standards and administer renewals.  Franchisees should review change in control language as well as definitions of “franchisor” and “successor” to get a better idea of how the agreement helps guide their current situation. State franchise relationship laws may restrict termination, nonrenewal or material change. Those statutes rarely prevent a sale, yet they can limit aggressive post sale enforcement.

Disclosure and risk of misrepresentation

A sale can trigger disclosure duties in some jurisdictions, especially when franchisees are asked to sign amendments, renewals or new development agreements.  Even where there is no legal requirement for new disclosure documents, communications during the transition can open the possibility of misrepresentation. Franchisees should document conversations, particularly regarding statements about pricing, supply availability, technology costs and territory protection made during these discussions. For example, the A Place At Home sale noted above included discussion of implementing a corporate buyback program. Depending on the details of the discussion, franchisees could hold the new owner accountable to the outlined terms. 

Common franchisee impact points

The practical effects of the sale usually concentrate on a small set of legal pressure points. Franchisees can help understand the impact by mapping the following items to specific agreement sections, state statutes, guaranty terms and loan covenants:
  • Royalty, advertising contributions, technology fees under revised schedules  
  • Mandatory remodel programs, accelerated timelines, new inspection protocols  
  • Approved supplier changes, rebates, distribution exclusivity, price escalation  
  • Territory adjustments, encroachment policy changes, alternative channel sales  
  • Renewal conditions, default enforcement, audit frequency, cure period tightening
These issues tend to appear first in “transition” amendments, policy manuals and brand standard updates. Franchisees can gain more information by requesting written explanations, cost estimates and implementation schedules.

Litigation posture and dispute resolution options

A new owner will likely change the way things are done. This can include an increase in audits and stricter notices of default. In light of these possible changes, it is important to review arbitration clauses, class action waivers and venue provisions.  Some purchasers consolidate legal operations and may pursue uniform enforcement across the system. Franchisees should evaluate limitations periods, fee shifting clauses and injunctive relief provisions to better understand their options in these situations. 

Immediate steps for franchisees

A disciplined response can help to reduce legal risk. The objective is clarity on what must change, what may change and what requires negotiation. The following steps can help put franchisees in a better position:
  1. Obtain transaction notice, confirm new franchisor identity and confirm payment instructions  
  2. Request transition policies in writing, identify “mandatory” versus “recommended” items  
  3. Compare required changes to agreement language
  4. Track added cost and preserve records
  5. Engage counsel for amendment review, renewal strategy and statutory rights analysis
These steps support informed negotiation and can help to preserve defenses if needed in the future.  A franchisor sale rarely ends a franchisee’s contract. It frequently results in changes that directly impact the franchisor/franchisee relationship. Franchisees are wise to treat the sale as a legal event, not only a branding event, to better position themselves to manage compliance and protect renewal rights as well as challenge overreach when necessary. Each relationship is unique. We have experience navigating the intricacies of the franchisor/franchisee relationship and offer free consultations for those who are considering legal action. ]]>