Garner, Ginsburg & Johnsen, P.A. Law Offices

Can a Franchisor Terminate a Franchise Agreement?

When you go into business for yourself, you know that you are ultimately responsible for its success or failure. There may be market factors that take a toll, and there may be forces of nature that you may not be able to overcome, but you know that how you weather the downs and take advantage of the ups is a reflection of your own business acumen.

Buying a franchise may offer you the resources you need to get started. The franchisor provides you with the brand and the materials, but whether the business succeeds is in your hands. You are the business owner, and you are in charge.

Most of the time.

Can a Franchise Be Taken Away?

Franchisors can make mistakes and suffer from poor planning and poor management just like any other business. The problem is that your business can suffer — or even close — when the mistakes are big enough, perhaps even leading to your franchisor terminating your franchise agreement.

You go into business thinking you are the boss, so you can’t get fired. The franchisor, however, has the power to terminate or not to renew your contract. You can essentially be fired, your franchise taken away, resulting in you holding the metaphorical bag.

Get Help Protecting Your Franchise

Reasons for having a franchise taken away include, but are not limited to, the following:

• Failure to pay franchise fees, whether it’s the initial one-time fee or keeping up with royalty payments or brand fund contributions. If fees are not paid to the franchisor on time, and there are multiple offenses, a franchisor may decide to terminate your franchise agreement.
• If a franchisee discloses incorrect information, such as erroneous net worth, or fails to provide records as required by the franchise agreement.
• If a franchisee has engaged in activities the franchisor believes will be damaging to the brand.
• A franchisee neglects or abandons the franchise.
• A franchisee fails to comply with the system standards or the franchisor’s requirements in the manual.

Insolvency and other types of franchise agreement breaches may also lead to a franchise being taken away.

You do have rights, though, and you may be able to fight back. If the franchisor has breached the franchise agreement, or forced you to shut down your business without good cause, you may be able to avoid disaster.

Understanding Your Legal Options

Concerned about the possibility of your franchise being taken away? The attorneys at Garner, Ginsburg & Johnsen P.A. have years of experience with fighting for the rights of franchisees, including helping stop franchisors who are looking to terminate franchise agreements. We understand how franchising works, and how to defeat franchisors who have overstepped the terms of their contracts or the limits of the law.

A termination letter may not be the end of your business. A nonrenewal notice may not be the end of your relationship with the franchisor. Contact our expert legal team if you are concerned about a franchisor trying to terminate your franchise agreement, and other issues such as franchise encroachment and territorial protection, and we will work to help protect your business and personal interests.