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By Sanjeev Kumar
Founding Attorney

What are my legal rights as an unhappy franchisee?

The franchisee/franchisor relationship is long term in nature and often fraught with disputes.  Your franchisor will have considerable influence over the operation of your business. While most franchise rules are intended to help your business succeed, at times you may run into a serious disagreement with your franchisor. Your exact rights in resolving a franchise dispute will depend in part on your individual franchise agreement and state law. Our Austin, Texas franchise law lawyers explore the ways in which you could resolve a dispute with your franchisor below.

Start With an Honest Discussion

Franchise disputes can stem from a wide array of matters. Perhaps your franchisor is mandating that you perform costly upgrades to your building, or maybe you do not feel that the franchise is spending the national advertising dollars which you contribute to effectively.  No matter the issue, your initial attempts to resolve the dispute will typically involve a frank discussion. Set up a face to face meeting, where possible, or a conference call if you are located some distance from the franchisor. Prepare a list of points to support your side of the argument and listen to the franchisor’s response with an open mind. At times, a franchise dispute can be resolved with open and honest discussions. After all, both of you ultimately have the best interests of the franchise at heart.

Look to Your Franchise Agreement 

When a dispute cannot be resolved through discussions, the issue will need to be escalated.  Most of the time, your franchise agreement will contain clauses that address the matter of dispute resolution.  You should closely review your franchise agreement to determine whether you agreed to a method of dispute resolution within it. Common dispute resolution options include mediation or arbitration. Mediation will involve a neutral third party who guides the franchisor and franchisee towards a settlement agreement. Mediation can save both parties time and money, but at times you may be unable to reach an agreement. Where mediation fails, or when the franchise agreement calls for it, arbitration will be the next step. Arbitration involves a third party who will issue a binding decision after hearing arguments from both sides.  Arbitration can take several days or weeks and costs more than mediation. Going to court is the final means of resolving a franchise dispute. Contact a franchise law attorney at the first stages of your dispute for assistance with resolving the matter in a cost effective and successful manner.

About the Author
Sanjeev Kumar is the founder and principal at the Kumar Law Firm, which provides a wide range of legal services to entrepreneurs and business owners in the area of business & corporate law and intellectual property along with related areas of interest to clients such as business succession planning, wealth preservation through estate planning, and alternate dispute resolution.