Franchises Attorney in Minneapolis, Minnesota

The Franchisor’s Promised Assistance Did Not Materialize

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If franchisors promise cost savings from group buying, and instead what happens, now you’re in the relationship, you’re paying more money than you should, and one good measure of that, are you paying too much, is can you call up a vendor of the same product or of a similar product, and buy it cheaper than you can for the franchisor or from the franchisor’s specified vendor. If you can, changes are that you’re paying too much. And we like to ask the “why” question around here. We like to think we are all lifelong learners.

And so if something is going on, we want to know why. And one logical deduction that we make when franchisees are paying too much for products is that the franchisor is giving kickbacks or rebates to the franchisor for the franchisor specifying to the franchisees, you gotta buy from this vendor. And that likely is the – we always like to have the franchisees, in those types of cases, bring in their franchise disclosure document. And in item eight, the law requires them to specify if they’re taking money from vendors of required purchases, what the formula is, how much money they’ve taken out of last year, and what their plans are for the future. And if they don’t do that, that’s actionable.

Minneapolis franchisee lawyer Michael Dady explains if a franchisee can recover when a franchisor breaks promises related to group buying.

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