Owning a franchise can be an exciting opportunity, but this can all come to a screeching halt when a dispute arises. Unfortunately, legal disputes can happen in any business and franchise owners are no different from any other company owner as far as being exposed to risks. Litigation for franchise disputes often happens in the following areas:
- Territory disputes
- Franchise agreement disputes
- Franchise termination disputes
- Financial disclosure or document compliance issues
Due to the unique facets of franchise law, franchise litigation is usually complex with distinct legal issues that stretch across several areas of the law. In the event that you see a franchise dispute emerging, it is essential to retain a knowledgeable franchise law attorney to protect your interests, whether it involves intellectual property, tort law, or contract law.
Litigation for Franchise Disputes
In some situations, the franchise agreement itself may also stipulate how the dispute is to be resolved. Sometimes a franchise agreement will require that the conflict be handled through mediation or arbitration. If the franchise agreement does not lay out how disputes are to be resolved, franchisees and franchisors may elect to enter mediation on their own. Mediation empowers both parties to play an active role in a resolution. Sadly, however, mediation does not always effectively resolve some complex franchise disputes. At this point, after unsuccessful attempts to resolve the issue, parties may need to enter litigation.
It is valuable to have a legal team who can explain all the advantages and disadvantages of various dispute resolution types while also knowing that the firm is prepared to take the issue to court, if necessary.
Franchise Contract and Agreement Disputes
A legal dispute of any kind for a franchisor or franchisee presents unique problems because the conflict can be very disruptive for business operations or growth. Having legal representation before a dispute emerges is strongly recommended so that prompt action can be taken to address the issue and minimize this disruption.
Unfortunately, it is not easy to predict possible legal disputes and this can present an additional challenge for a franchisee or franchisor without established legal representation. This makes the selection of the right franchise litigation firm all the more important. Being able to trust that the firm has the background in franchise litigation to handle the issue effectively and efficiently could make a big difference for operations, so make sure to evaluate the firm’s potential before opting to work together.
Franchise agreement disputes usually involve one or a few of the following concerns:
- Agreement termination and reveal
- Breach of good faith and fair dealing
- Non-compete agreements and restrictive covenants
- Fraud and disclosure issues
- Breach of contract or licensing agreement
- Enforcement of arbitration clauses.
One of the best ways to guard against franchise litigation is to have a comprehensive franchise agreement in place to help both franchisers and franchisees avoid legal disputes. However, if a dispute emerges and litigation is unavoidable, it is essential to find experienced representation to handle these issues.
Franchise Termination Disputes
In the majority of franchise termination disputes, a franchiser will take legal action to enforce the covenant against a non-compliant franchisee. In this situation, though, a franchisee may also file a claim against the franchisor in order to protect his or her operations. Regardless of the situation, it is important to find a dedicated advocate for anyone involved for handling a franchise dispute legal issue.
Things to Keep in Mind When Hiring a Franchise Litigator
Many states have their own unique franchise dispute statutes that are designed to give franchisees leverage to assert claims. The majority of franchise agreements have a provision that will pre-determine, for example, what state the dispute must be litigated within? Where state franchise law may apply, however, the provision inside the franchise agreement like this may not be enforceable. Likewise, a state franchise law may allow a franchisee to assert claims that would usually not be available to the franchisee under common law.
Understanding when and how to use these can be extremely beneficial. When a conflict initially emerges, it is essential to reach out to a franchise litigation attorney to learn more about how to best handle it. Often addressing these concerns early on can help prevent the issue from escalating and becoming more costly and complex. Finding an attorney with experience in this field is vital for protecting the business interest of franchiser or franchisee. In the event that a franchise dispute has emerged, do not hesitate to reach out to an experienced attorney immediately. Contact KPPB LAW for more information.