Minneapolis franchisee lawyer Ron Gardner describes options for a franchisee when facing the threat of termination.
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When a franchisee is threatened with termination it is an all or nothing proposition. Everything that a franchisee has is tied up in that relationship. And I bring that up first because you have to think about this also from the franchisor’s perspective you’re one of 50, 100, 1,000. It’s not as big a deal to them as it is to the franchisee because if the franchisee loses their business they’ve likely lost everything that they’ve worked for, many times they’ve lost their entire investment, their house, their kids college funds, everything is tied up with it. And so, there is nothing more frightening than opening a letter from your franchisor that says that you’re going to be terminated 30 days from now or effective immediately or whatever it might say. And so you need to act quickly. You need to act promptly. You often need to act forcefully.
And so step number one is get a lawyer. Get a lawyer that understands franchising. Get a lawyer that understands the relationship and the legal nuances in the franchise context. There are lots of state laws that come into play in franchising and distribution. There are lots of regulations that you need to know and they’re different from state to state. I think a lot of people make a mistake when they get that letter, most people do go get a lawyer, they understand right away that they’ve got a problem. But they go down to the lawyer that helped them write their will or buy their house or set up the corporation that’s running their franchise and the reality is is that when you’re going to go up against the franchisor in a very hostile situation their lawyers on the franchise side are franchise lawyers. They know what they’re doing. They’re the A-team. People need to go find lawyers like those of us here at Dady & Gardner that don’t do anything else but represent franchisees in business threatening disputes with their franchise or as manufacturers or suppliers. Failure to do that only increases the risk that the franchisee is going to lose everything they have.