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The “Go-To Guy” For Hardball Franchise Litigation.

– Multi-Unit Franchisee Owner ($3 Million case)

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The “Go-To Guy” For Hardball Franchise Litigation.

– Multi-Unit Franchisee Owner ($3 Million case)

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The “Go-To Guy” For Hardball Franchise Litigation.

– Multi-Unit Franchisee Owner ($3 Million case)

Businessman thinking with cityscape

The “Go-To Guy” For Hardball Franchise Litigation.

– Multi-Unit Franchisee Owner ($3 Million case)

Businessman thinking formulas

The “Go-To Guy” For Hardball Franchise Litigation.

– Multi-Unit Franchisee Owner ($3 Million case)

Nationally Recognized Franchise, Antitrust, and Commercial Contracts Trial Lawyers

Top Rated Franchise Attorney

Testimonials

"Jeff, I am amazed that you were able to get the liquidated damages down that low, which allowed us to avoid bankruptcy. Until we retained you we had been dealing with hotel consultants who appeared to make little head-way in lowering the liquidated damages."

Multi-Unit Hotel Franchisee, Economy Segment
(value over $3 Million)

Get Legal Assistance from Franchise Lawyers Who Defend the Franchisee

The Goldstein Law Firm is a boutique national law firm that represents exclusively franchisees and dealers, not franchisors, suppliers or manufacturers. There are only a handful of franchisee lawyer specialists remaining in the country, as most have begun representing both franchisors and franchisees.

Franchise law is a multifaceted area of law that requires specialization. Any franchise attorney can tell you about a variety of cases where franchise agreements have gone south.

Here at Goldstein, our attorneys have as much as 30 years of experience handling all aspects of franchise litigation throughout the county.

We also specialize in franchise agreement assistance, bringing you the latest developments in franchise and distribution law. With the publishing of our Franchise Trends newsletter, we can help franchisees stay updated on developments concerning different legal aspects of franchising.

Dealing with the complexities and challenges of franchise law requires focus and specialization, which is why we represent dealers and franchisees exclusively. Unlike other firms, we at Goldstein are on the side of the franchisee. We can help you decipher the fine print of your franchise agreement and single out details your franchisor may not want you to know.

Without a knowledgeable and competent franchise consultant, you may be vulnerable to the pitfalls of franchise law. Simply walking away is not a viable solution if you’re looking to protect your assets and yourself from financially damaging consequences. For those who have already signed an agreement and are struggling with franchisor difficulties, our franchise law firm also provides legal assistance through its franchise attorneys.

Frequently Asked Questions on Franchise Law:

Do franchisors have an obligation to their franchisees to act competently?

In theory, it’s possible that a franchise attorney could prove that a franchisor violated a franchise agreement by poorly managing the franchise system. Inadequately capitalizing the franchise system or poorly managing advertising campaigns could potentially violate a franchise agreement.

However, there are few if any recent case findings in which a franchisor has violated the terms of a franchise agreement. And if the franchise agreement hasn’t been violated, the courts almost never support a free-standing claim of negligence against the franchisor.

In other words, courts have held that franchisors do not owe a duty of competence to their franchisees.

It’s interesting to note, however, that many franchise law firms stay busy addressing the flip side of this issue–whether the franchisee has acted negligently in operating his or her franchise

Do franchisors have a duty to provide support to their franchisees?

On paper franchisors have this duty to some degree. Most franchise agreements explicitly set forth the respective duties owed by both the franchisors and franchisees.

However, the provisions outlining those duties owed by franchisors are few and normally too ambiguous to enforce. Most franchise agreements include contractual language stating to the effect that “the franchisor doesn’t guarantee the success of the franchisee.”

In practice, this means that franchisors really don’t have a compelling duty to provide support to their franchisees.

Also, most franchise agreements require franchisees to state in their agreements that their business venture involves risks, one of the most prominent being the business knowledge of the franchisee.

This results in a double standard: The franchisor has only a few ephemeral obligations to the franchisor. But in contrast, the “whereas” provisions in the introduction of most franchise agreements indicate that the franchisor is the undisputed guru in operating franchises in that particular industry.

What are some of the most common duties imposed on franchisors under franchise agreements?

It’s important to recognize that these duties are incredibly limited in scope. That said, they include, among other things: (1) locating appropriate sites for stores, (2) managerial assistance, (3) advertising assistance, (4) providing operating manuals, (5) training, and (6) identifying third party vendors from whom necessary products and services may be sourced.

Keep in mind, these areas are so broadly defined that even the best trial attorney would have difficulty in trying to identify – never mind proving – the contours of such duties unless he or she had extensive experience within a franchise law firm.

Are franchisors permitted to modify their requirements or system standards during the term of the franchise?

Believe it or not, they usually can make these changes. Almost all courts confronted with this question have readily permitted franchisors to change the obligations owed to their franchisees during the term of the franchise.

Franchisors gain this fluidity by lacing their franchise agreements with language that “the franchisor is permitted to modify or change the Operations Manual.” They can then “incorporate by reference” the Operations Manual into the franchise agreement.

The franchisor’s unbridled discretion is further bolstered by language in the franchise agreement that “the franchisor may modify the Operations Manual in its ‘sole discretion.'”

Everybody knows that people and businesses are subject to liability for “negligence.” Can't franchisors be held liable for negligence to their franchisees as well?

The short answer is no, not under the common law of almost every state.

When the franchisee is only claiming economic loss – which is almost always the case -the franchisee must seek its damages through a breach of contract action.

The franchisee would have to prove that the franchisor violated the franchise agreement. This is very difficult to prove, as the franchisor’s duties are usually few, ephemeral, and deliberately vague.

It’s possible a franchisor could be found liable if he or she failed to work in good faith and with fair dealing, but this is a long shot.

Note, however, that courts have found franchisors liable for negligence in certain
cases where personal injuries were involved.

Read more FAQs

Recent Litigation Issues on Franchising, Distribution and Antitrust Law

Franchise Terminations and Self-Inflicted Harm

February 16, 2017

In a recent franchise case the United States District Court of New Jersey (the “Court”) hammered another nail in the termination coffin of a former 7-Eleven franchisee Karamjeet Sodhi (“Franchisee Sodhi” or “Mr. Sodhi”), Manjinder Singh, and Karamjit Singh (collectively, “the Franchisees”), when it denied the Franchisees’ Motion for a stay of the Court’s Order granting judgment to Plaintiff 7-Eleven. In Sodhi, the Court found that the Franchisees failed to show that they were likely to succeed on the merits of their claims because they breached the franchise agreements by failing to pay payroll and income taxes and then subsequently failing to cure those breaches. 7-Eleven, Inc. v. Sodhi, Civil Action No. 13-3715 (MAS) (JS), 2017 U.S. Dist. LEXIS 14339 (D.N.J. Jan. 31, 2017) In refusing to grant the Franchisees’ Motion for Stay, the Court initially noted that “the standard for obtaining a stay pending appeal is essentially the same as that for obtaining a preliminary injunction, and that such a stay ‘should be granted only in limited circumstances.’” The Court explained that to obtain the stay, the Franchisees must show all four of the following factors, including; (1) the movant is likely to succeed on the merits; (2) denial will result in irreparable harm to the movant; (3) granting the injunction will not result in irreparable harm to the non-movant; and (4) granting the injunction is in the public interest. With regard to the first factor, the Franchisees argued that they were likely to succeed on the merits of their appeal […]


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Alternative Facts and Franchise Protection Legislation

February 15, 2017

Alternative Fact: “Franchisees are happy with existing laws governing franchise ownership.” Passing state franchise relationship laws, which aim to protect many of the basic rights of franchisees and dealers that have been stripped from by the language of their individual franchise agreements, is a contentious, arduous and lengthy process. Indeed, even today, many states still do not have legislative protection for franchise owners in their states. See State Franchise Law Protects Franchisees Florida is the most recent state to begin the process toward enacting such franchise legislation. The Protect Florida Small Business Act (the “Legislation”), sponsored by Florida State Senator Jack Latvala (SB 750), claims that it will bring fairness to the relationship between corporations and the Floridians who own and work in franchise establishments. The Legislation was filed in the Florida Senate on February 7, 2017. View Bill Info The Legislation states that its intent “is to promote fair business relations between franchisees and franchisors and to protect franchisees against unfair treatment by franchisors.” The Legislation generally focuses on three areas including protection from unfair terminations of franchises, protection from unfair restrictions on transfers and sales of franchises, and protection from non-renewals of franchise agreements. As soon as the Legislation was announced, the usual adversaries in the franchise world dusted off their muskets, ran to the front lines, and began shooting. One franchisee advocacy group, the Protect Florida Small Business (“PFSB”), pointed out that industry-specific franchises in Florida were treated better than non-industry-specific franchises: “Florida laws already provide safeguards for […]


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What to Expect in Franchise Arbitration

November 4, 2016

If you are facing a dispute with your franchisor, there is a good chance that you will need to submit to arbitration in order to obtain a resolution. Why? Because arbitration is the preferred dispute resolution method among franchisors, and franchise agreements commonly include “mandatory arbitration” clauses which require franchisees to go to arbitration instead of seeking to enforce their rights in court. What is Arbitration? Arbitration is a form of alternative dispute resolution (ADR) that can in some ways be thought of as a “light” version of courtroom litigation. The process is still adversarial (unlike mediation, where the parties seek to work toward an amicable resolution), and a neutral third-party (either an arbitrator or a panel of arbitrators) still issues a binding decision based upon the evidence and arguments presented. The parties also still engage in discovery, although discovery is typically limited, and they still attend hearings at which their attorneys present arguments and question witnesses. However, arbitration moves at a faster pace than litigation, and as a result it is generally less expensive as well. Why Do Franchisors Prefer Mandatory Arbitration? Franchisors generally prefer arbitration for a number of reasons. Some of these reasons have to do with the controls they can exercise within the terms of their mandatory arbitration provisions, but others have to do directly with the nature of the arbitration process. Five of the top reasons that franchisors generally prefer mandatory arbitration include: Arbitration denies franchisees the right to a jury trial Franchisors can designate […]


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Franchisee Prevails Early on Covenant of Good Faith and Fair Dealing Claim

November 3, 2016

Franchisee Prevails Early on Covenant of Good Faith and Fair Dealing Claim By: Jeffrey M. Goldstein, Esquire  (202) 293-3947 One of the few tasks more daunting than trying to get Kant, Nietzsche and Plato to agree on a definition of ‘the good life’ is that of struggling to get two courts to agree on the legal meaning of the covenant of good faith and fair dealing. Indeed, some Courts vociferously object to using the phraseology itself, arguing that the word ‘covenant’ must be replaced by the word ‘duty.’ Other courts refuse to allow such a claim to be prosecuted unless the claimant also pleads a concomitant and redundant breach of an explicit provision in the contract. And, a few other courts adamantly deny the existence of the covenant of good faith and fair dealing. This energetic jurisprudential fracas among courts regrettably has not been quelled by the scores of scholarly articles that have been written on the subject; indeed, the prolific academic commentaries have done little more than throw gasoline on the intense intellectual blaze.  Not surprisingly, this existential inferno has scorched, and continues to char, many franchisees and dealers.  However, despite the terrible historical track record of franchisees that have tried to use the covenant of good faith and fair dealing in litigation against their franchisors, from time to time a franchisee does have success using the theory. One such franchisee is the auto dealer plaintiff in a case now pending before the United States District Court for the […]


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Considering a Franchise? An Overview of the Franchise Buying Process

November 3, 2016

Buying a franchise is a process. From the time you formulate the idea to become a franchisee to the time you sign the franchise agreement, you will go through a number of steps – some more complicated than others – that are all critical to ensuring that you open your doors with the best possible chance for success. If you are considering buying a franchise, here is a brief overview of what you can expect along the way: Steps in the Franchise Buying Process Step #1: Get in Touch with the Franchisor The first step is to get in touch with the franchisor. This could be through the franchisor’s website, over the phone, or at an expo or other franchise event. You will likely be asked to complete an application, and at this point you may also receive a copy of the franchisor’s Franchise Disclosure Document (FDD). By law the franchisor is required to provide a minimum 14-day waiting period before you sign a franchise agreement, and as a result you will likely be asked to sign two copies of a standard receipt page confirming the date on which you received the FDD. Step #2: Hire an Attorney to Review the Franchise Agreement and FDD Once you receive the FDD (which will include a copy of the franchise agreement), you will want to give these documents to an attorney to review. For more information on choosing an attorney to review your franchise agreement and FDD, we encourage you to read: […]


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Recent Blogs on Franchise, Dealership and Antitrust Law

What to Expect in Franchise Arbitration

November 4, 2016

If you are facing a dispute with your franchisor, there is a good chance...


Read More

Considering a Franchise? An Overview of the Franchise Buying Process

November 3, 2016

Buying a franchise is a process. From the time you formulate the idea to...


Read More

What Do You Need to Know About the “Liquidated Damages” Clause in Your Franchise Agreement?

November 2, 2016

As a struggling franchisee, you might think that your franchisor...


Read More

10 Key Considerations for Due Diligence in Purchasing a Franchise

November 1, 2016

When considering a franchise opportunity, it is critical to conduct your...


Read More
Solutions

Reformist Thoughts on Franchise, Dealership, Distribution and Antitrust Law

Alternative Facts and Franchise Protection Legislation

February 15, 2017

Alternative Fact: “Franchisees are happy with existing laws governing franchise ownership.” Passing state franchise relationship laws, which aim to protect many of the basic rights of franchisees and dealers that have been stripped from by the language of their individual franchise...


Read More

Franchise Lawyer, Jeff Goldstein, of Goldstein Law Firm

Choosing a Franchise Law Firm to Represent You

My Franchise Agreement is Expiring, Now What? (Part I of II)

Contact Us

Goldstein Law Firm, PLLC

1629 K St. NW, Suite 300,
Washington, DC 20006

Phone: 202-293-3947
Fax: 202-315-2514

Free Consultation

Free Consultation

Top Rated Franchise Attorney