Restraint of Trade Attorney Helping Current and Former Franchisees Impacted by Unlawful Restraints of Trade
As a franchisee, you own your own business, but the ways in which you operate your business are heavily influenced by your franchisor. This is true for everything from the products and services you offer to the source of the supplies you buy. Additionally, in the vast majority of franchise systems, franchise agreements restrict former franchisees’ post-termination business opportunities as well. While many of these restraints of trade are legal, some are not.
If you are struggling to succeed as a current or former franchisee, it is important that you speak with a franchise lawyer about your legal rights. In addition to enforcing (or challenging the enforcement of) your franchise agreement, there are various statutory protections you may be able to utilize to fight unlawful restraints of trade. Restraint of trade attorney Jeffrey M. Goldstein has more than 30 years of experience representing active and terminated franchisees; and, if your franchisor is imposing unlawful restraints, he can take appropriate legal action on your behalf.
3 Types of Unlawful Restraints of Trade
1. Unreasonable Restraints of Trade that Go Against Public Policy
While restraints of trade are not inherently unlawful (and in many respects they are hallmarks of the franchise model), franchisors can go too far in restricting their franchisees’ commercial activities. In the absence of other guiding legal principles (such as the antitrust and post-termination protections discussed below), restraints on trade are subject to a “reasonableness” standard. As a general rule, public policy in the United States favors open competition; and, if a restraint on trade unreasonably restrains competition, then it may be legally unenforceable.
2. Contracts in Restraint of Trade that Violate Federal Antitrust Laws
Under the federal Sherman Act, various types of commercial restrictions can constitute unlawful “contracts in restraint of trade.” Anti-competitive restraints on trade can violate various other federal antitrust and consumer protection laws as well. This includes tying arrangements, which are common in the franchise sector, as well as certain types of minimum price controls, customer restrictions, and refusals to deal.
3. Unenforceable Post-Termination Restraints of Trade
Post-termination non-competition covenants (or covenants not to compete) can constitute unlawful restraints of trade in many cases as well. Various courts have deemed overreaching non-competition covenants to be unlawful restraints, and have either revised the scope of these covenants or held them unenforceable in their entirety. When assessing whether a post-termination covenant not to compete constitutes an unlawful restraint of trade, the courts consider factors including: (i) any negative impact on consumers, (ii) whether the covenant serves a legitimate business interest of the franchisor, and (iii) whether the covenant is unduly harsh or oppressive for the franchisee.
Is Your Franchisor Forcing You to Fail? Let a Restraint of Trade Attorney Help You Today
Is your business struggling due to an unreasonable restraint of trade imposed by your franchisor? If so, restraint of trade lawyer Jeffrey M. Goldstein may be able to help. To learn more about your legal rights in a free and confidential consultation, call the Goldstein Law Firm at 202-293-3947 or request an appointment online today.