Negotiating Franchise Property Commercial Leases And Resolving Disputes
Last updated on April 18, 2025
Entering into a franchise contract is a pivotal step for franchisees. You will be managing a business, making strategic decisions and taking financial risks. Having an experienced Miami franchise attorney by your side can help you achieve favorable terms that align with your business goals.
Let us help. Our franchise lawyers at Zarco Einhorn Salkowski, P.A., provide dedicated support to franchisees at every stage of their journey. From securing a property lease to managing operational challenges and resolving disputes, we will be here for you. With decades of experience and a deep understanding of franchise law, we offer practical solutions to help our clients fulfill their objectives and vision. Free consultations are available.
Understanding The Structure Of Franchise Property Leases
The structure of a franchise property lease often differs from typical commercial leases. In many cases, the franchisor leases the property from the landlord and subleases it to the franchisee. This setup adds additional layers of obligations and potential risks for the franchisee such as:
- Paying rent directly to the franchisor, which may include added fees or conditions
- Providing personal guarantees to both the landlord and franchisor
- Adhering to specific operational standards mandated by the franchisor
These dynamics can significantly impact the franchisee’s financial stability and operational flexibility.
Key Issues In Franchise Lease Negotiations
Franchise property leases often contain provisions that, if not carefully negotiated, can place the franchisee at a disadvantage. Common issues in these leases include exclusivity clauses, which may limit the franchisee’s ability to operate freely within a certain area. Renewal terms can also be problematic if they are not favorable to the franchisee, potentially leading to uncertainty about the future of the business.
Additionally, maintenance responsibilities can impose significant burdens on the franchisee, especially if they are required to handle extensive repairs or upkeep. Signage restrictions might limit the franchisee’s ability to effectively market their business. Furthermore, personal guarantees can pose a financial risk to franchisees, as they may be held personally liable for lease obligations.
It is essential to address these points during lease negotiations to establish terms that protect the franchisee’s interests while fostering a stable relationship with the franchisor and landlord.
Franchise Lawsuits: Top Challenges Faced By Franchisees
Disputes may arise during a franchise lease such as disagreements over property improvements, business interruptions or exclusivity rights. Common areas of contention include:
- Franchise agreement terms: Franchisees might dispute terms they perceive as unfair or overly restrictive such as fees, royalties or territorial restrictions
- Disclosure issues: Franchisees may argue that the franchisor provided misleading or incomplete information during the disclosure process, which is required by law in many jurisdictions
- Performance representations: Disputes can arise if franchisees believe they were given unrealistic expectations regarding potential earnings or support
- Training and support: Franchisees might claim that the franchisor failed to provide adequate training or ongoing support as promised in the franchise agreement
- Operational control: Franchisees may challenge the level of control the franchisor exerts over their business operations, feeling it limits their autonomy excessively
- Territorial encroachment: Conflicts can occur if a franchisor allows another franchisee or company-owned location to operate too close to an existing franchisee, potentially cannibalizing their business
- Renewal and termination: Disputes often arise over the renewal of the franchise agreement or the conditions under which a franchisor can terminate the agreement
- Supply chain issues: Franchisees might challenge requirements to purchase from specific suppliers, especially if they believe these result in higher costs
- Intellectual property: Disputes can involve the use of trademarks and branding, especially if the franchisee believes the franchisor is not adequately protecting the brand
- Breach of contract: Either party might allege that the other has not fulfilled their contractual obligations, leading to legal challenges
In any business dispute, it is important to seek legal advice. Our legal team can help you understand your legal options under the franchise agreement and relevant laws. Mediation or arbitration may be required or preferable to litigation, depending on the terms of the franchise agreement. Our attorneys provide strategic counsel and legal representation to resolve disputes efficiently.
Speak With An Experienced Franchise Lawyer
At Zarco Einhorn Salkowski, P.A., in Miami, we aim to help franchisees confidently address the complexities of their enterprise. Contact us at 888-580-7844 or by sending us an email. We look forward to discussing your circumstances and learning how we can support your success. We represent clients throughout Florida and across the nation.
