Wrongful Supplier And Franchise Discrimination

Many franchisees and dealers believe that whenever they are disciplined or criticized by their franchisor or supplier, their franchisor or supplier has unlawful discriminated against them. However, many times this is not the case. Laws prohibiting supplier and franchisor discrimination are neither prolific nor effective because courts, Congress and state legislatures’ general view is that overly restrictive discrimination laws may unreasonably impede franchisors and suppliers’ ability to make necessary and financially-justified decisions.

Unlawful supplier and franchise discrimination is not a uniform concept in practice or by definition. States have disparate approaches to regulating, or not regulating, franchise discrimination. Although approximately ten states explicitly ban certain types of franchise discrimination, some of these states’ laws are incredibly narrow, and only prohibit franchisor discrimination that specifically involves termination or non-renewal. In contrast, other state anti-discrimination statutes are broader, covering purchase offerings, royalty fees, services provided, advertising services, and other aspects of the ongoing relationship between franchisors and franchisees.

Many other states do not prohibit franchise discrimination by statute. In these states, aggrieved franchisees and suppliers must generally rely upon the common law to assert their claims of differential treatment. Similar to some laws in states with franchise anti-discrimination statutes, the common law will usually permit franchisors and suppliers to treat franchisees and dealers differently so long as the discrimination is based upon reasonable and justifiable distinctions between the franchisees and dealers. Accordingly, in some states, franchisors and suppliers may legally discriminate among franchisees and dealers even where the favored and disfavored franchisees or dealers are similarly situated. Many times, the outcome of such disputes turn on whether the franchisors or supplier’s differing treatment seems fair in light of the unique history or characteristics of the complaining franchisee or dealer.

In addition to the common law and general state franchise statutes, there are industry-specific state and federal laws that address dealer and franchise discrimination. For instance, both the federal government and every state have enacted automobile dealer legislation, which generally bans terminations not carried out with “good cause.” Some of these statutes have been interpreted to prohibit termination based upon terms that were discriminatorily imposed upon an aggrieved dealer. In other industry-specific legislation, such as state and federal statutes regarding motor fuel dealers, farm and construction equipment, and beer, wine and liquor distributors, there are similar prohibitions of unreasonable discriminatory conduct.

Success Of Goldstein Law Firm Contesting Wrongful Dealer And Franchise Discrimination

Having helped protect franchisees and dealers from unlawful supplier and franchise discrimination for over thirty years, Jeff Goldstein possesses the unique ability to identify and prosecute unfair discrimination that is arbitrary, capricious, and not justified economically. As noted above, franchise statutes and the common law sometimes allow franchisors and suppliers to treat franchisees and dealers differently so long as the discrimination is based upon reasonable and justifiable distinctions. The job of your franchise attorney is to determine whether the discrimination is unreasonable, under all of the circumstances, and therefore illegal. This determination is complex and nuanced, including many factors such as market size, unit size, unit operational history, unit financial performance, system financial performance, market penetration, payment history, operational compliance record, and unit and system profitability, among others.

Jeff Goldstein and Goldstein Law attorneys excel in analyzing franchisor conduct to determine whether it qualifies as actionable unlawful discrimination. Their abilities have helped many franchisees and dealers qualify for the most advantageous rates, programs and terms provided in the relevant franchise or distribution system.

What To Do If You Suspect That You Are Being Harmed By Your Franchisor Or Supplier’s Discriminatory Conduct

Jeff Goldstein’s thirty years of franchise litigation experience enables him to skillfully distinguish between lawful and unlawful differential treatment. If you suspect that you have been treated unfairly and differently than other similarly situated dealers and franchisees, you should contact franchisee attorney Jeff Goldstein at the Goldstein Law Firm at 202-293-3947 Don’t let your franchisor or supplier’s discriminatory treatment devastate your business and personal fortunes.

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