There are many different reasons why a part of a franchise agreement can initiate litigation, which can often be followed by unsuccessful mediation. Franchisees may terminate a franchise agreement prematurely for a variety of reasons. The business may not be as successful as hoped, or the franchise system has not met expectations. The franchisee must prove that the franchisor violated important terms of the franchise agreement. The breach of the franchise agreement must be significant. So much so that it becomes virtually impossible for the franchisee to continue to operate the franchise. This does not apply to the renewal, renewal, modification or transfer of an existing agreement. For example, someone who buys an existing franchise is not entitled to a cooling-off period. The analysis and follow-up of a right to termination of a franchise agreement often requires an important process.
It begins with a comprehensive analysis of the questions, facts and evidence. Prior to the parliamentary inquiry, concerns were expressed that the code does not provide franchisees with sufficient protection against franchisees who make arbitrary or inappropriate decisions to terminate and make a profit as a result of violations or the assumption of franchisees. 1. Ask yourself if the decision is legal; Do you have that right in the agreement? Have you followed the code termination obligations? Yes, you can. As a general rule, franchisees should do everything in their power to meet their obligations under the franchise agreement and to manage the transaction until the end of the contract term. But sometimes that`s not possible. To learn more about the franchise agreement, visit our definition page here. I must say that negotiating these special early exit rights is unusual for a franchisee and that many franchisors do not maintain them. For a franchisee without a contract exit strategy faced by a franchisee that loses money, or a family health problem that kept it away from the business, or another problem that makes businesses that make ownership and operation unenforceable, many franchisees are struggling for the future.