As a franchisee or dealer, you expect your franchisor to have your business’s best interests in mind. After all, the franchise relationship is a symbiotic one in which – at least theoretically – both parties benefit from the other’s success.
However, as a practical matter, this is more the exception than the norm. Especially in large franchise systems in the top franchised industries, franchisors focus on the profitability of the franchise system as a whole, often with little regard for the interests of any one individual franchisee. In doing so, they often overstep their legal bounds, giving rise to claims for state and federal antitrust violations.
About Antitrust Law
Antitrust is a unique and complicated area of the law that is focused on preserving market competition. Without antitrust laws, franchisors, automotive manufacturers and other large corporations would be free to do things like: conspire to control prices, divide markets to avoid competition, and engage in other anti-competitive practices that harm consumers. Of course, despite the long-established principles of antitrust, companies continue to violate the law in order to boost their bottom lines; and, when they do, those that are harmed by their unlawful practices can pursue legal remedies.
Antitrust Violations in Franchising: What Franchisees and Dealers Need to Know
1. State and Federal Antitrust Laws Protect Franchisees and Dealers.
While state and federal antitrust laws protect consumers, they also protect franchisees and dealers. If you own a franchise or dealership and you believe that your business is being harmed by an anti-competitive practice, you may have a claim for an antitrust violation.
2. Antitrust Violations Can Take Many Different Forms.
There are numerous examples of anti-competitive practices that can have damaging consequences for franchisees and dealers. Some of the most-common examples of antitrust violations in the franchise context include:
- Agreements on Terms of Trade
- Customer Restrictions
- Discriminatory Prices or Terms of Sale
- Exclusive Dealerships
- Exclusive Territories and Exclusive Distributorships
- Franchisee and Dealer Terminations
- Full Line Pricing
- Minimum Price Fixing
- Predatory Advertising
- Tying Arrangements
- Unilateral Refusals to Deal
3. The Franchise Model Has Unique Implications for Antitrust Claims.
While franchisors and manufacturers are subject to the same antitrust laws as other large corporations, antitrust issues often have unique implications within the franchise model. As a result, franchisees and dealers in Chicago pursuing legal remedies for antitrust violations should seek the representation of an attorney with significant antitrust and franchise law experience.
4. Antitrust Laws Allow for Private Civil Actions in Addition to Government Enforcement.
While state and federal authorities pursue select cases of anti-competitive conduct, franchisees and dealers will often need to initiate civil litigation in order to protect their rights. Antitrust laws at both levels of government include “private right of action” clauses that allow for these types of lawsuits.
5. Franchisees and Dealers Affected by Antitrust Violations Various Potential Remedies Available.
In private antitrust litigation, franchisees and dealers generally have a few different remedies available. Depending upon the facts and specific legal issues involved, the potential remedies can include restitution, damages, and injunctive relief prohibiting the anti-competitive activity.
Questions? Contact Us to Speak with a Franchise Antitrust Attorney
If you have questions about pursuing an antitrust claim against your franchisor, we encourage you to inquire for an initial consultation. To schedule an appointment with attorney Jeffrey M. Goldstein, please call (202) 293-3947 or contact us online today.