There is no more terrifying moment for a franchisee or dealer than when it receives a notice of a franchise termination. Many years of franchisees’ blood, sweat and tears are repeatedly appropriated without compensation through wrongful franchise terminations. Given the complexity and number of applicable franchise laws, as well as the shock associated with receiving a termination notice, franchisees and dealers facing a termination should not waste time trying to negotiate with their franchisors or suppliers; instead, a terminated franchisee should act immediately to obtain the advice of an experienced litigator with significant expertise in distribution and franchise law.
Depending upon your particular state and industry, it is possible that a relevant franchise relationship law would bar your franchisor or supplier from terminating your business. Absent a statutory “good cause” requirement, it is also possible that your franchisor did not fully comply with the procedural requirements for terminating your franchise or dealership. Further, there are times when, even though a franchise or distribution agreement appears to permit termination for an identified cause, under the common law, the particular basis of the termination is not sufficiently material or substantial to support a termination. In addition, in some situations, if the franchisee or dealer is able to establish that the franchisor or supplier acted in “bad faith” in carrying out the termination, the franchisor or supplier will be held to have acted wrongfully.
When your franchisor or supplier threatens to terminate your dealership or franchise, it is crucial that you obtain the prompt advice of counsel to help you understand your rights regarding wrongful franchise terminations. If you are facing a wrongful franchise termination, call Jeff Goldstein at 202-293-3947 at the Goldstein Law Firm.