Franchise agreements are often very complex meaning that disputes can often occur. Our specialist solicitors provide professional, practical and clear advice to both franchisees and franchisors on a wide variety of contract disputes.
There are a variety of issues that can arise after entering into a franchise agreement, including:
- Breach of the agreement.
- Misrepresentation. This usually relates to false representations made by the franchisor about sale projections or overheads, which the franchisee relied on.
- Intellectual Property issues. A claim for breach of intellectual property rights can arise if the franchisee uses the franchisor’s name, brand or logo without specific permission.
- Termination issues. There may be points of dispute when a franchisee wants to terminate the agreement with the franchisor, such as the enforceability of post-termination restrictive covenants.
How to resolve the dispute
If the parties want to resolve the dispute and continue with the franchising agreement, it is important to resolve the dispute amicably. The best approach in these circumstances would be to explore Alternative Dispute Resolution such as a round-the-table meeting or formal mediation. Mediation involves the parties appointing an independent mediator who seeks to offer a solution to the disagreement and assist in reaching a settlement. The nature of mediation means that it is not as confrontational or as costly as litigation and therefore it helps to preserve the business relationship between the parties.
However, there may be some circumstances where alternative dispute resolution or mediation would not be appropriate. For instance, if the relationship between the parties has completely broken down, then mediation is unlikely to be successful. In these circumstances, it may be that the franchisor or franchisee wants to bring the business arrangement to an end.