If in case you are facing problems with your franchisor then don’t sign any document describing dispute resolution. Franchisors usually offer a small concession to help you but extract a definite amount of claim and other factual representations in return. It is normally seen that the franchisees experiencing financial problems in their franchise business usually approach the franchisor for help. After giving veiled threats of taking the franchise back from the franchisee, the franchisor agrees to help by making a small amount concession by delaying the payment and reducing the minimum royalty amount for a short period of time. In this situation, franchisee out of desperation, sign the agreement as they were explained by the franchisor that if they fail to sign the agreement, they could lose their business rights. In this particular situation, there is an urgent need to consult an experienced franchisee attorney before signing. Because of lack of consultation, franchisees did not find the “boilerplate” clause inserted by the franchisor. In the agreement, franchisor inserts the clause that says franchisee had consulted with a business lawyer and they had no claims against the franchisor for anything whatsoever and even the franchisor had never done anything wrong. The franchisor makes sure to add in the agreement a general release from all claims. In every part of the world except Washington, a general release is enforceable against the franchisee. The attempt of the franchisor to force you to sign on those false “representations” that says you have consulted one of the Franchising Lawyers prior to signing the document, actually it can make the situation even worse. In many situations, it is suggested to the franchisee to confront their genuine disputes with the franchisor rather than going to take the offered benefit. The benefits offered by franchisor rarely protect the franchise business from failure; in fact, they work more as a protective shield for any wrong act of the franchisor. In a nutshell, if you are going for renewal of the franchise agreement with your franchisor, it is crucial to consult your franchise attorney with your renewal document.
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AuthorMr. Herman has lectured at the First Annual Franchise Conference held in Shanghai, China in October 1998. He has also lectured on Franchising Issues in San Jose, Costa Rica in September 2001, and with the ABA Forum on Franchising in Orlando, Florida in October 2005. Archives
May 2018
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