Franchises Attorney in Minneapolis, Minnesota

Violating Promise for Best Pricing

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With respect to that promise, first of all, I would say we like to see it the promise of best pricing in writing, and under the rules that apply to franchise disclosure documents in item eight, if the franchisor is making that commitment to the franchisees, they are to disclose that in item eight. So if you’re looking at a franchise, you want to pay particular attention, you should care about pricing, and pay particular attention to what item eight says. And some of them do say, “We will work with you to negotiate the best possible pricing for high quality goods and services. And we’ll use our collective bargaining power for your benefit, and we won’t be taking any kickbacks or rebates from the vendor unless they give us money to support the adverting fund, which case all the money we receive will go into the advertising fund for the benefit of all franchisees.”

So you want to look and see what item eight says, and you want to see is there something in writing in a franchise agreement with respect to what they’re gonna do. And even if the answer to question one doesn’t say – in item eight, they’re gonna negotiate for best pricing or it doesn’t say that in the franchise agreement, if it’s silent, you still have an argument under the covenant of good faith and fair dealing, that the franchisor is obligated to meet the reasonable expectations of the franchisee, and that is to go out and help us increase our profitability and not do the opposite.

So you’ve got some potential remedies there. We like to see something in item eight or the franchise agreement. But even if it isn’t we have some good faith and fair dealing arguments that we’ve been able to successfully assert when the facts are right.

Minneapolis franchisee lawyer Michael Dady discusses remedies if a franchisor violates a promise for “best pricing.”

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