Franchise Relationship Laws

Franchise Relationship Laws

Franchise Relationship laws differ from the FTC Rule and state franchise registration/disclosure laws in that relationship laws govern what happens after the franchise is purchased.  Franchise relationship laws vary significantly by state, and more states have franchise relationship laws than do franchise registration laws.  However, there is no federal franchise relationship laws.  In general, franchise relationship laws:

  • May impose the duty of good faith and fair dealing;
  • May require good faith or statutory permitted reasons for franchise terminations;
  • May require reasonable or specified notice and cure periods before terminating;
  • Provide for damages for unlawful terminations;
  • Require a good faith or statutory reason for refusals to renew or transfer a franchise;
  • Provide for reasonable or specified notice periods prior to non-renewal or refusal of a transfer;
  • Provide for damages for unlawful non-renewal or refusal for transfers;
  • Prohibit certain contractual terms, like those requiring disputes be litigated or arbitrated outside of the franchise territory; and
  • Prohibit certain types of discrimintion among franchisees.

Not all state franchise relationship laws are the same, and case law interpretations are many. As a result, you need an attorney who keeps up-to-date with current developments, and can translate that knowledge into a compliance plan, or remedy for you.

If you have questions regarding your rights or obligations under state franchise relationship laws, call or e-mail us:  813-337-6650 – scott@franchiselegalteam.com

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