Oral promises can be legally enforced, but good luck getting your franchisor to agree to something that it did not put in writing. Unfortunately, from the initial sales process through the waning moments of a franchisor-franchisee relationship, it is not unusual for franchisors and their representatives to say things knowing that they will be difficult (if not impossible) to ever prove in court.
With this in mind, as a franchisee, it is important to get into the habit of getting things in writing. From negotiating changes to your franchise agreement (instead of relying on a sales representative who says, “Don’t worry about that, I’ve never seen us actually use that clause against a franchisee.”) to communicating via email when you have issues down the road, documentation can be your best friend. Follow up when you do not get answers, send confirmatory emails (i.e. “To confirm what we just discussed . . .”) and keep copies of everything you get in writing.
Litigating Disputes Based on Oral Promises
But, let’s suppose you are past the point of no return. Let’s suppose that you bought a franchise based upon oral representations that proved to be false, or that you are now facing potential termination due to your reliance on an oral promise – both of which are common scenarios. What legal options do you have available?
1. Proving the Oral Promise
One option is to try to prove the oral promise. While this can be difficult, it is not always impossible. For example, if the same representative made the same promise to multiple prospective or current franchisees, it may be possible to use these other individuals’ testimony to present a compelling argument. Through the litigation (or arbitration) process, you may also be able to obtain written interrogatory answers or oral deposition testimony – both of which must be provided under oath – from the person who made the promise. Additionally, even if you did not get anything in writing, there may be internal emails stored on the franchisor’s servers which you may be able to obtain through discovery.
2. Asserting Your Rights Under Your Franchise Agreement
Another option may be to assert your rights under an applicable provision of your franchise agreement. Even if you did not get a specific promise in writing, the language in your franchise agreement may be broad enough to provide grounds to seek a legal or equitable remedy. Although most franchise agreements are heavily one-sided, an experienced franchise litigation attorney may be able to find a provision that you can use to gain leverage in negotiations, arbitration or litigation.
3. Asserting Your State Franchise Law Rights
Finally, many states have enacted franchise laws that provide franchisees with additional rights. These laws typically apply to the pre-sale disclosure process, the ongoing franchise relationship or both. Depending upon the nature and timing of the oral promise, you may be able to use your state’s franchise law to get out of your franchise or pursue other remedies.
Schedule a Free Initial Consultation at the Goldstein Law Firm
If you are facing a dispute with your franchisor and would like more information about the options you have available, we encourage you to contact us for a free, no-obligation consultation. To speak with franchise litigation attorney Jeffrey M. Goldstein in confidence, please call 202-293-3947 or request an appointment online today.