Jul 27, 2022 - Blog, Franchise Articles by |

If you own a franchise and you want out, you are not alone. While franchisees often go into business with rose-colored glasses, they often end up jaded, ready to sever their ties with their franchisor and move on.

But is this possible? Can you terminate your franchise and still keep your business?

Generally speaking, the answer is “No.” Most franchisors do not give their franchisees the option to just walk away. Even if you wait until your franchise agreement expires, you may still be subject to various post-termination obligations.

When Can You Get Out of a Franchise?

Whether your franchise is struggling or you are fed up with your franchisor, you may be ready to walk away. But, you might also want to keep your business. After operating under the franchise model for a period of time, many franchisees find that they would be happier—and better off—on their own.

Unfortunately, most franchise agreements contain provisions that prevent franchisees from severing ties. While some franchise agreements allow franchisees to terminate in certain events of default, many are silent on franchisees’ termination rights entirely. This is by design. It keeps franchisors in control, and it helps them avoid mass walk-outs that can threaten their brand’s reputation.

So, when can you get out as a franchisee? While individual circumstances vary, broadly speaking, franchisees’ options for exiting the franchise system are:

  • Assert a contractual right of termination based on a franchisor default (if available);
  • Assert a statutory right of termination or rescission (laws vary by state);
  • Negotiate a mutually agreeable separation; or,
  • Wait for the franchise agreement term to expire.

What Can You Expect Post-Termination or Post-Expiration?

Let’s say you are able to get out of your franchise (or you decide to wait out the end of your franchise agreement term). What can you expect post-termination (or post-expiration)?

Most franchisors impose several post-termination obligations through their franchise agreements. Whether you terminate your franchise agreement for cause or allow your franchise agreement to expire, you may be subject to obligations including:

  • Non-Competition Non-competition covenants prohibit former franchisees from operating competing businesses post-termination, usually within a certain geographic radius and for a specific period of time.
  • Non-Solicitation – Franchisors also frequently prohibit their franchisees from soliciting former customers post-termination. The idea behind these provisions is that these are customers of the franchised brand and not of the individual franchisee.
  • DeBranding – Even if you are able to continue operating a business post-termination, you will be required to completely de-brand. This will entail replacing signage, replacing other branded items, and removing any furniture or equipment that is part of the franchisor’s trade dress.

Having Problems with Your Franchisor? Contact Attorney Jeffrey M. Goldstein

If you are having problems with your franchisor, attorney Jeffrey M. Goldstein can help you evaluate your options and choose the best path forward. Depending on your circumstances, Mr. Goldstein may be able to help you negotiate an exit that allows you to continue operating your business. For a free and confidential consultation, please call 202-293-3947 or get in touch online today.

Lawyer USA

Complex Commercial Litigation Law Firm of the Year – USA

Lawyer USA

Complex Commercial Distribution Litigation Representative

Lawyer USA

Antitrust & Franchise Law Firm of the Year – Washington DC

Lawyer USA

Best Franchise Lawyer of the Year – New York

Lawyer USA

Best for Franchise Disputes – USA

Lawyer USA

Complex Commercial Litigation Law (Franchisees and Dealers) 2021 – USA

Lawyer USA

Antitrust and Franchise Law Firm of the Year in DC

Lawyer USA

Leading Professionals in Law

Lawyer USA

Franchise Law
in the District of Columbia

Lawyer USA

Franchise Law Firm
of the Year – USA

Lawyer International

Lawyer International
Legal 100
2018

Lawyer International

Lawyer International
Legal 100
2019

ACQ5 LAW AWARDS 2019

US (New York)
Franchise Lawyer
of the Year
ACQ5 GLOBAL AWARDS 2019, JEFF GOLDSTEIN, GOLDSTEIN LAW FIRM, PLLC

ACQ5 LAW AWARDS 2019

US (New York)
Franchise Law Firm
of the Year
ACQ5 GLOBAL AWARDS 2019, GOLDSTEIN LAW FIRM, PLLC

Lawyers of Distinction logo

2020 Power Lawyers

Esteemed Lawyers of America Logo

Esteemed Law Firm Complex Litigation

Global Law Experts Logo

Recommended Firm in Franchise Litigation

Who's Who Attorney Logo

Top Attorney USA – Litigation

Avvo Franchise Lawyer Symbol

Superior Attorney in Franchising

Avvo Franchise Lawyer Symbol

Superior Attorney in Antitrust

Finance Monthly Global Award Winner Logo

Franchise Law Firm of the Year

Lead Counsel logo

Chosen Law Firm for Commercial Litigation

BBB of Washington DC

A+ Rated

Washington DC Chamber of Commerce

Verified Member

Lawyers of Distinction logo

Franchise Law Firm of the Year

ISSUU

Best Law Firm for Franchise Disputes in 2017

Law Awards Finanace Monthly

Franchise Law Firm of the Year - 2017

Top Franchise Litigator for Franchisees and Dealers

Top Franchise Litigator for Franchisees and Dealers

2017 Finance Monthly Award

2017 Finance Monthly Award

ACQ5 LAW AWARDS 2018

Franchise Law Firm
of the Year
ACQ5 LAW AWARDS 2018

ACQ5 LAW AWARDS 2019

Franchise Law Firm
of the Year
ACQ5 LAW AWARDS 2019

Franchise Law Firm of the Year

Franchise Law Firm of the Year

Franchise Law Firm of the Year

Franchise Law Firm of the Year
Global Awards 2017

Global Law Experts

Franchise Law Firm
of the Year
in New York – 2019

Finance Monthly Law Awards - 2018

Finance Monthly Law Awards - 2018

Franchise Law Firm of the Year

Franchise Law Firm
of the Year
Global Awards 2018

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

Downtown Chicago Office

30 South Wacker Drive 22nd Floor #3341,
Chicago, IL 60606

Phone: 312-382-8327

Free Consultation

Free Consultation