Minneapolis franchisee lawyer Ron Gardner discusses if a franchisee can prevent a franchisor from termination.
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Oftentimes when people get a termination notice they have to decide do I want to let the termination happen because I’m just tired of dealing with these people and I’d rather find something else to do or can I stop this termination. And whether or not someone can do that, that is stop the termination and whether or not they have a legitimate choice as to let it go or try and stop it is obviously going to turn on the facts and circumstances of every case, and again, the place where the franchisee sits. In many states, approximately 16 of them there are statutes that say that a franchisor cannot terminate without good cause. They will have to give the franchisee notice and an opportunity to cure and even if that’s happened, in some states franchisors also have to give extra time for the franchisee to wind down or pay the franchisee some amount of money for their assets in a very few of those 16 states. And so if you can stop them, maybe. There might be ways that you can do it. You can seek an injunction potentially on termination and that’s going to turn on whether or not you can meet the tests that are required to get an injunction. Are you suffering irreparable harm, which basically means is it more than money that’s in play here? What’s the probability of success on the merits? Do you have a statutory or contractual claim that you might be able to enforce against the franchisor that says that this termination is unlawful or unfair? And in terms of the balance of the harms, the balance of harms to you and your family and your employees is going to be weighed against the franchisors harm to the brand. I mean if you’re somebody who’s done something that the franchisor can hold up and say this is going to tear down my whole system if this news gets out, well, that’s the type of thing that the judge has to go through and balance. But we advocate very forcefully for our clients because, again, when franchisees are terminated they lose everything. Not the case with franchisors and that’s a fact that we always use to point out that in terms of the balance of the harms it’s worse for the franchisee to get terminated than for the franchisor to have to continue to work with this franchisee to make things better.