Franchisee law

 

There is no specific law that protects franchisees. Instead, if you are entering into a franchising agreement, you are protected by the ordinary rules that govern other business structures.

As a result, if you are the franchisee, you may find yourself in a weak bargaining position, compared with the other party. It is important to recognise this from the outset and take steps to mitigate the discrepancy.

Franchise agreements

These documents govern the relationship between the franchisee and franchisor. They set out the respective rights and obligations of each party and also cover factors such as how disputes are to be settled.

Franchise agreements generally tend to favour the franchisor. This is because it is the franchisor who drafts the agreement, using specialist lawyers who are instructed to advance their interests, legally and financially.

It is important that before becoming a franchisee, you also have a specialist solicitor to carefully review the agreement and consider the legal and financial implications of the terms, and to explain the rights and obligations that will flow once the agreement is signed.

If you are not happy with the agreement, you should not sign it, and ask for it to be redrafted. Your solicitor will be able to suggest alterations and amendments.

Often, franchisors will be using a standard set of terms and conditions and it is not unusual for them to need changing to fit the needs of the parties. If the franchisor is particularly reluctant to amend the agreement, you should consider why this may be.

Grounds for dispute

Problems may arise when you or the franchisor have clearly breached fundamental terms of the contract, such as the provision of supplies or training, or the payment of management service fees.

It is also possible that once you have entered the franchise arrangement, you may find that the reality of the franchise is not quite as you imagined it would be, or as the franchisor led you to believe.

For example, the start-up costs involved in fitting out the business for opening may be substantially greater than forecasted; the customer-base may not be as large or stable as the franchisor may have represented; and the income you receive may be considerably less.

In such situations you should seek legal advice from a specialist to ascertain whether such shortcomings are attributable to a breach of the terms or misrepresentation. If so, you may be able to bring a claim for compensation.

You can learn more about this subject by visiting our page on franchising law.

If you are a franchisee, or are thinking of entering into a franchising arrangement, we can put you in touch with a local specialist solicitor free of charge. Please call us on 0800 1777 162 or complete the web-form above to speak to one of our trained advisors.

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