If you have been misled by your franchisor, you could have a claim for fraud. In this scenario, it will be critical to ensure you make informed decisions, and you will want to promptly discuss your legal options with an experienced franchise attorney. Jeffrey M. Goldstein, founding attorney of Goldstein Law Firm, represents franchisees nationwide.

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As a prospective franchisee, there are lots of red flags to be aware of during the due diligence process. These include incomplete FDD disclosures, evasiveness from the franchisor’s representatives, and franchisees who are hesitant to talk about their experience, among others. By working with an experienced franchisee attorney during your due diligence, you can spot these red flags before you make an uninformed buying decision.

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In Walk Good Bahamas, Ltd. v. Alpargatas USA, Inc., the United States District Court for the Central District of California addressed whether a distributor could maintain breach-of-contract and good-faith claims after an express written exclusive distributorship agreement expired by its own terms. The court held that when parties continue to perform under a contractual relationship after expiration, an implied-in-fact contract may arise, especially where the conduct extends beyond mere acceptance of orders to include approval of business plans, receipt of confidential data, and continued representation as an exclusive distributor. The court denied dismissal of the breach-of-contract and breach-of-implied-covenant claims, finding that the distributor plausibly alleged a new agreement through post-expiration conduct. However, the court dismissed with prejudice the distributor’s claims for breach of fiduciary duty, fraudulent inducement, and tortious interference, holding that a standard exclusive distributorship does not create a fiduciary relationship, that alleged concealment of potential breaches does not support fraud, and that a party cannot transmute its own breach into tortious interference with third-party contracts. This decision may underscore the importance of clear post-expiration conduct and contractual language in distributorship relationships and may provide guidance on the boundaries between contract and tort remedies in commercial relationships. Case Identification and Parties This case, Walk Good Bahamas, Ltd. v. Alpargatas USA, Inc., 2026 U.S. Dist. LEXIS 168695, was decided on July 28, 2026, by the United States District Court for the Central District of California, with Judge Josephine L. Staton presiding. The plaintiff was Walk Good Bahamas, Ltd., a company […]

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When franchisees begin searching for litigation counsel, they often assume that all franchise lawyers occupy roughly the same position in the legal marketplace. That assumption is understandable because many firms use similar language, emphasize their franchise experience, and describe themselves as knowledgeable advocates in franchise disputes. Yet beneath those similar marketing messages are dramatically different business models, client relationships, and professional incentives. The distinction matters because the interests that a lawyer advances over the course of a career frequently shape the legal environment in which future franchisees must operate. In reality, franchise litigation lawyers generally fall into the three distinct categories discussed below. Understanding those categories is essential for any franchisee attempting to make an informed decision about legal representation. The differences are not merely academic, nor are they limited to firm size, geography, or years of experience. Rather, they involve a fundamental question about whose interests the lawyer is advancing when important legal issues arise. First, there are the firms that represent franchisees and dealers exclusively. These firms devote their litigation practices to advancing franchisee and dealer interests and do not represent franchisors. Their professional energies, legal arguments, appellate strategies, and long-term objectives are aligned with one side of the franchise relationship. Every significant precedent they help create is developed from the perspective of expanding, protecting, or preserving the rights of franchisees and dealers. There are only two national litigation firms in the country that truthfully represent only franchisees. Second, there are firms that openly represent franchisors. These are […]

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Franchisors are supposed to disclose the “estimated initial investment” required to open for business in Item 7 of the Franchise Disclosure Document (FDD). But franchisors’ estimates aren’t always as accurate as they should be, and prospective franchisees can receive a very misleading picture of how much it costs to open in some cases. This makes it critical for prospective franchisees to independently verify their startup costs during the due diligence process.

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“Semi-passive” franchise ownership has become an increasingly popular goal in recent years. Semi-passive owners, or “executive franchisees,” make high-level decisions but do not personally manage their franchise’s day-to-day operations. While semi-passive franchise ownership offers flexibility and time for other endeavors, pursuing this option requires careful consideration. As a result, prospective franchisees who are considering semi-passive ownership should consult with an experienced franchisee attorney who can help them make informed decisions.

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As a franchisee, your territory is among the most valuable aspects of your franchise. As a result, protecting your territory is extremely important. If your franchisor or another franchisee is encroaching on your protected or exclusive territory, you should consult with an experienced franchise attorney about your legal options promptly.

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Facing a dispute with your franchisor can put you in a difficult position. On the one hand, it is important to stand up for your rights as a franchisee. On the other, you have your relationship with your franchisor to consider, and there are costs involved in taking (or defending against) legal action. With this in mind, it is best to speak with a franchise lawyer sooner rather than later.

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Author Jeffrey M. Goldstein Introduction The Balance of Power in Franchising examines more than 33,000 Franchise Disclosure Documents covering 4,371 franchise systems between 2009 and 2023 to measure how authority and decision-making power are distributed between franchisors and franchisees. Ulrich Atz, Blake Eliason, Peter Norlander, Sérgio Pinto & Marshall Steinbaum, The Balance of Power in Franchising (Dec. 3, 2024). The authors find that franchisee autonomy generally declined over the study period, while franchisors expanded their control over important aspects of the business relationship, including territory, pricing, products, suppliers, information sharing, dispute resolution, and post-term restrictions. One of the paper’s most significant findings is the sharp decline in exclusive territorial protections and the corresponding rise in contractual provisions allowing franchisors to compete within a franchisee’s market. The study argues that economic power should be understood not only as market power or concentration, but also as the ability to make business-relevant decisions on behalf of others, making authority itself an important object of empirical study. Across numerous contractual provisions, the authors find increasing use of restraints that limit franchisee discretion, including exclusive supply requirements, full-line forcing, pricing controls, and restrictions on business conduct. Survey evidence further suggests that many franchisees perceive themselves as having more autonomy than their contracts actually provide, indicating a gap between contractual reality and franchisee understanding. The paper also rejects the argument that franchisees are compensated for surrendering autonomy, finding that greater franchisor control tends to be associated with higher franchise fees rather than lower ones. Ultimately, the […]

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Franchisees who are interested in cashing out must strictly comply with their franchise agreements both before and during the transfer process. Franchise agreements often include several conditions on transfer, including securing the franchisor’s approval, paying a transfer fee, and complying with the franchisor’s right of first refusal.

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