As a franchisee, you will quickly become familiar with the lopsided nature of the franchise relationship. But, while franchisors exert significant control over their franchisees, there are practices that go too far. These unfair franchise practices will entitle franchisees to remedies in many cases—but franchisees who fall victim to these practices need to know when it is time to assert their legal rights.
So, when can (and should) franchisees sue their franchisors for unfair franchise practices?
As with most legal questions, there isn’t a single straightforward answer. Instead, protecting your legal rights as a franchisee requires a careful assessment of various strategic factors. For example:
How Severe is the Violation?
One of the first factors to consider is the severity of the violation. While minor violations of the law can be frustrating, from a practical perspective, they won’t necessarily warrant legal action. The juice simply won’t be worth the squeeze. It’s unfortunate, but many franchisors have learned how to carefully walk the line so that they can get away with as much as possible.
Does Your Franchisor Have a History of Unfair Franchise Practices?
But, even if a minor violation doesn’t warrant legal action on its own, a pattern of unfair franchise practices might. If your franchisor’s unfair practices have added up to create significant financial strain (or other issues) for your business, then it might make sense to assert your legal rights.
Have Other Franchisees Been Similarly Affected?
If you are dealing with unfair franchise practices, then there is a good chance that other franchisees are dealing with these practices as well. If you can join together with other franchisees as a group, your group may be able to share the financial costs of pursuing legal action while also asserting greater leverage.
Do You Have Other Grounds To Sue Your Franchisor?
When considering a claim for unfair franchise practices, it is also worth hiring a lawyer to assess whether you have other claims you can assert. Franchisees can sue their franchisors on various grounds—including breach of contract and violation of state franchise laws, among others. If you have multiple grounds to sue your franchisor, this could improve the economics of pursuing a claim as well.
What Do You Want To Get Out of Suing Your Franchisor?
Finally, when considering a lawsuit for unfair franchise practices, it is important to know what you want to get out of suing your franchisor. Are you seeking to force changes in the way the franchisor manages the system? Are you seeking to get out? Are you seeking to recoup your losses? These are all very different situations that require different strategic approaches.
Request a Confidential Consultation with Lawyer Jeffrey M. Goldstein
If you have questions about suing your franchisor for unfair franchise practices, we encourage you to contact us promptly for more information. To discuss your options with lawyer Jeffrey M. Goldstein in confidence, please call 202-293-3947 or tell us how we can reach you online today.