Minneapolis franchisee lawyer Ron Gardner discusses what a legal actions a franchisee can take in order to stay in business.
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If someone has got a termination notice and they’re being told they’re being terminated effectively immediately or in 30 days, 60 days, 90 days, whatever it is and they’ve decided that they actually do want to stay in business there are several avenues that we can pursue to try and make that happen. Frequently we’ll first engage, assuming there’s enough time, in direct negotiations with the franchisor. Dady & Gardner is well known throughout the United States for their representation of franchisees and so in most franchise systems we know who the lawyers are on the other side. We’ve probably dealt with them or somebody in their law firm. We can pick up the phone and just try and negotiate some sort of cure program for the franchisee. Look, clearly the franchisor is upset, our client’s upset you might say to the other side, what can we do to make it okay that this franchisee can prove that they should be able to stay in the system or that you can let this go this time and we’ll work it out in the future?
There is oftentimes because people don’t mind leaving the system but they don’t want to lose everything, we can negotiate a temporary stay. Well, why don’t you let these people stay in for a year, give them an opportunity to sell their business so they can find another franchisee to put into that place. And that’s win-win because franchisors frequently don’t want locations to actually close. They might want a particular franchisee out of the system but it’s bad for them to have the sign go down and lose the goodwill associated with the location. So a win-win is to let the franchisee stay for a period of time while they sell so the franchisee can get their money back, the franchisor can keep their location open, it’s a win-win.
And then in the worst case scenarios when the franchisor says no, we’re not going to do anything we can seek injunctive relief. That is go before a court, a judge, or an arbitrator seeking an order to say that is unlawful because there’s a violation of the contract by the franchisor or a violation of state law by the franchisor. If we can find a hook that we can enforce against the franchisor and get a court order that will stop an unlawful termination.