A franchise agreement sets out the terms and conditions under which a franchisor and franchisee will operate a business. When either party ceases to fulfill its obligations under the agreement, a conflict may arise, and an experienced attorney may be needed to resolve the issue efficiently. James G. Schwartz is a business litigation lawyer who has been helping clients in the Pleasanton area and elsewhere in the East Bay for over 35 years. He skillfully represents both franchisors and franchisees. Attorney Schwartz works closely with businesses to help them try to maximize the benefits from their franchise agreements.The Rights of Franchisors and Franchisees
The franchisor-franchisee dynamic can become quite complicated at times. In theory, both parties should benefit. The franchisor increases the exposure of the brand, and the franchisee has the opportunity to run his or her own business. Conflict sometimes arises, however, when one party alleges wrongdoing by the other. If either the franchisee or franchisor perceives that the other party is not upholding his or her end of the business deal, some type of resolution must be sought.
Franchise disputes may be settled through mediation, arbitration, or the traditional court process. Many of the franchise disputes that arise in California are settled either in arbitration or mediation. Often, there is an arbitration agreement between the franchisor and franchisee that will predetermine the terms of arbitration, such as where the case will be heard and which party should incur certain costs associated with the arbitration.
There are many potential claims that a franchisor could raise against a franchisee. For example, if a franchisee is not following protocol or improperly executing franchise operations, the franchisor may bring a lawsuit claiming that the franchisee is damaging the reputation or goodwill of the brand. If a former franchisee terminates the agreement and opens an independent establishment that resembles the franchisor’s business, the franchisor could possibly bring an action for breach of a non-compete agreement.
There are also claims that franchisees bring against franchisors, of which a common example is misrepresentation or fraud. In bringing this cause of action, the franchisee is asserting the franchisor did not disclose pertinent facts throughout the franchise sale. With this type of claim, franchisees often claim that the franchisor withheld crucial or necessary information that may have persuaded the franchisee not to enter into the contract.
Another typical franchisee claim is a breach of the implied duty of good faith and fair dealing. This claim is a broad type of action for improper franchisor behavior. With this action, the franchisee asserts that the franchisor, by taking certain actions, is preventing the franchisee from receiving all of the benefits of the agreement. For example, a franchisee may bring this claim if the franchisee feels that the franchisor’s operations and protocols are too strict and leave no room for franchisee discretion.Seek Legal Representation for Commercial Litigation in Pleasanton
Whether you are a franchisee or a franchisor in Pleasanton or the surrounding communities, enlisting a knowledgeable commercial law attorney is important in protecting your rights if any dispute arises. James G. Schwartz also provides adept legal counsel to businesses in East Bay cities such as Newark, Dublin, Fremont, and Hayward. Call us today at 925-463-1073 or contact us online to schedule an appointment.