Regardless of the industry, several key points for both franchisees and franchisors exist when negotiating and entering into a franchise agreement. Both parties should always pay close attention to those provisions that obligate specific action or inaction, but determining what will happen if and when the relationship ends, and how it will end is an equally, if not more important consideration.
Historically, provisions for a franchisee’s right to terminate its relationship with a franchisor were rare. The law of several states supported this approach, only discharging the franchisee’s obligations to perform under the franchise agreement after the franchisor’s termination of the agreement.
More recently, however, federal courts have applied the basic contract law approach that discharges a non-breaching party’s contractual obligation upon the material breach of the other party to the contract. In addition, more negotiation room exists for franchisees of new franchise systems as they assist in the establishment of the new franchise brand.
Regardless of the goal, our attorneys can assist with all review and negotiation needs of potential franchisees and franchisors to ensure the foundation of the business relationship is sound. Please contact our firm to further discuss at (813) 223-1099, Mr. Dennis Leone at email@example.com.