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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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While owning a franchise can be profitable, it is debatable that franchise ownership has made “countless Americans rich,” as claimed in a recent article published by The Economist. This also ignores data suggesting that the average single-unit franchise owner earns less than $100,000 annually, and that for new owners, the average is closer to $50,000. Additionally, around one in ten franchises fail completely within the first two years.

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Many experienced franchisees say they wish they had known more about the unique challenges of franchise ownership before moving forward. Not having a clear understanding of the costs involved is a common lament as well. Some also say they expected to take a more hands-off approach than their franchises ultimately required.

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Last month, we published an article outlining seven reasons franchisees should be cautious about using artificial intelligence (AI) when researching franchise opportunities. In that article, franchise attorney Jeffrey M. Goldstein highlighted some of the key pitfalls of using AI for research purposes, particularly when researching anything with significant financial or legal implications (or both).

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You received a franchise termination notice. Maybe it was expected, or maybe it wasn’t—but now you are facing a high-risk situation that you never expected when you signed your franchise agreement. In this situation, what can (and should) you do? Equally important, what should you avoid doing, and what (if anything) can a franchise lawyer do to help?

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Franchise networks and dealer networks both achieve scale by separating ownership from brand control and by distributing execution across many local businesses. Because the agreements that govern these networks cannot anticipate every future contingency and because both sides invest in assets that are highly specific to the relationship, the same disputes recur: territorial encroachment that is increasingly driven by centralized e‑commerce and delivery applications; disagreements over national advertising funds or cooperative marketing funds; frictions over vendor and parts rebates; price, termination, and renewal conflicts; and, in dealer systems in particular, disagreements over warranty reimbursement and the permissibility of direct‑to‑consumer sales models. These outcomes are not random or idiosyncratic. They are the predictable result of incomplete contracting, relationship‑specific investments, and multi‑dimensional performance that is difficult for a court to verify after the fact. A microeconomic governance lens—combining Transaction‑Cost Economics (TCE), which explains why parties choose particular governance structures, with the logic of relational contracts, which explains how repeated dealings can support credible informal promises, and a practical deterrence program—turns these ‘never‑ending problems’ into design choices about information, remedies, and the value of the future. Summary The purpose of this paper is to provide a practical governance playbook for both franchising systems (franchisors and franchisees) and dealer systems (manufacturers and dealers). The playbook is grounded in TCE, in the economics of relational contracts, and in a straightforward deterrence framework that rests on three pillars: better signals, verifiable sanctions, and a credible future. The aim is to reduce wrongdoing, litigation, and distrust by […]

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Franchise attorney Jeffrey M. Goldstein, founder of Goldstein Law Firm, has once again been named to the Franchise Times’ list of U.S. Legal Eagles. Published annually, the U.S. Legal Eagles list highlights the nation’s “top franchise attorneys,” as selected through the publication’s formal nomination process.

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While it is becoming increasingly common to use ChatGPT, Gemini, Perplexity, and other artificial intelligence (AI) platforms to conduct research rather than searching online, this approach poses several risks. This is especially true for prospective franchisees. As a prospective franchisee, it is critical to do your due diligence, and there are multiple issues with AI that make it unfit for this purpose. Keep reading to learn more from franchisee lawyer Jeffrey M. Goldstein.

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Most franchise agreements include provisions requiring franchisees to pursue mediation or arbitration (or both) rather than taking their franchisors to court. As a franchisee, understanding your legal options is important. So, if you need to hold your franchisor accountable, what do you need to know? Here are some key insights from national franchise lawyer Jeffrey M. Goldstein.

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The International Franchise Association (IFA) recently published a report titled, The Value of Franchising. As the IFA explains, the report reflects the results of a survey of nearly 3,000 franchisees as well as an “economic analysis comparing franchises with non-franchise businesses” conducted by Oxford Economics. Here, national franchisee attorney Jeffrey M. Goldstein shares his thoughts on the report’s conclusions.

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