Franchise Solicitor: How can they assist?

The franchise model has gained significant popularity as a means for entrepreneurs to extend their brand presence and tap into fresh markets through independent franchisees. However, alongside its advantages, franchising also brings the possibility of disagreements and tensions between franchisors and franchisees.

A franchise solicitor can play a crucial role in ensuring that franchise relationships are established, maintained, and terminated with fairness, adherence to the law, and ethical standards. These legal professionals offer a range of services to individuals and businesses engaged in franchising, providing valuable advice and support throughout the franchising process.

What is the role of a franchise solicitor?

A franchise solicitor can assist with franchise agreements by offering a wide range of legal services:

• Reviewing and drafting franchise agreements: Franchise solicitors assist in drafting franchise agreements, which are the legal contracts that outline the rights, obligations, and responsibilities of both the franchisor and the franchisee. The solicitor will assess the franchise agreement to ensure it meets legal requirements and safeguards the interests of both the franchisor and franchisee.
• Negotiating terms: The solicitor can negotiate the terms of the franchise agreement on behalf of their client, aiming for fairness and reasonableness.
• Due Diligence: Franchise solicitors conduct due diligence on behalf of their clients, especially for prospective franchisees. They review the franchisor’s disclosure documents, financial statements, franchise agreement, and other relevant documentation to assess the risks and potential liabilities associated with the franchise opportunity.
• Providing advice on obligations and post-termination restrictions: The solicitor will advise the franchisee on their responsibilities and limitations outlined in the agreement and help them comprehend their rights.
• Ensuring compliance with franchise laws: A franchise solicitor will ensure that the franchise agreement adheres to pertinent franchise laws and regulations.
• Offering guidance on termination: The franchise lawyer can offer guidance on the conditions and procedures involved when attempting to exit a franchise agreement.

Overall, franchise solicitors play a vital role in ensuring that franchising transactions are conducted legally, ethically, and that their franchise clients’ interests are protected. They provide valuable legal expertise and guidance throughout the entire British franchising process, from initial negotiations to ongoing compliance and dispute resolution.

Common franchise disputes

Franchise disputes refer to various disagreements and conflicts that emerge within the franchisor-franchisee relationship. Some common franchise disputes include:

• Fees and Payments: Disputes may occur regarding franchise fees, royalties, advertising fund contributions, and other financial obligations outlined in the agreement. This could include disagreements over the calculation or timing of payments.
• Performance Standards: Franchisees may dispute performance standards set by the franchisor, claiming they are unreasonable or unattainable. This could include disagreements over sales targets, operational benchmarks, or quality control measures.
• Renewal and Termination: Franchisees may dispute the terms and conditions for renewal or termination of the franchise agreement, particularly if they feel they are being unfairly treated or if there are discrepancies in the process outlined in the contract.
• Supply Chain and Procurement: Disputes may arise over the franchisor’s approved suppliers, pricing agreements, or restrictions on purchasing goods and services outside of the designated supply chain.
• Marketing and Advertising: Franchisees may dispute the allocation of advertising funds, the effectiveness of marketing campaigns, or the franchisor’s compliance with its obligations to promote the brand.
• Intellectual Property: Disputes may occur over the use of trade marks, logos, and other intellectual property associated with the franchise brand, including issues related to infringement, licensing, or unauthorised use.
• Competition law and Restrictive Covenants: Franchisees may dispute non-compete clauses or other restrictive covenants that limit their ability to operate other franchise businesses or compete in the same industry.
• Misrepresentation and Fraud: Franchisees may allege that the franchisor made false or misleading statements during the franchise sales process, leading to financial losses or failed expectations.
• Compliance with Laws and Regulations: Disputes may arise if the franchisor fails to comply with applicable laws and regulations, including those related to franchising, consumer protection, and business operations.

Resolving franchise disputes

There are several methods available for settling franchise disputes. These methods aim to facilitate dispute resolution between franchisors and franchisees in a fair and efficient manner. Some common methods for settling franchise disputes include: 

Negotiation: Negotiation involves direct discussions between the franchisor and franchisee to reach a mutually agreeable resolution. This method allows the parties to engage in open dialogue, present their perspectives, and explore potential solutions without involving third parties.

Mediation: Mediation involves the assistance of a neutral third party, known as a mediator, who helps facilitate communication and negotiation between the franchisor and franchisee. The mediator does not make decisions but assists the parties in reaching a voluntary settlement. Mediation can be a cost-effective and less adversarial alternative to litigation.

Arbitration: Arbitration is a more formal process where an impartial arbitrator or panel of arbitrators is appointed to hear the dispute. The arbitrator reviews evidence and arguments presented by both parties and makes a binding decision. Arbitration may be mandatory if specified in the franchise agreement or voluntary if both parties agree to use arbitration to resolve the contractual dispute.

Litigation: Litigation involves resolving the dispute through a court of law. This method can be costly, time-consuming, and adversarial. Franchise disputes that cannot be resolved through negotiation, mediation, or arbitration may be brought before a court for resolution. It is important to note that legal action through litigation should typically be considered a last resort.

Ultimately, the appropriate method of resolving a franchise dispute will depend on the specific facts of the case and the preferences of the parties involved. Some disputes may be resolved quickly and informally, while others may require more formal and lengthy proceedings.

A franchise solicitor can provide vital guidance when resolving franchise disputes. They can recommend which franchise dispute resolution method would be most effective for your case and can help you to reach a positive outcome.

Why choose us?

All of the solicitors on our panel have the experience and expertise required to take on your case and provide you with professional legal advice. Each solicitor is vetted before being allowed onto our panel, and we only select the legal teams in the business. All of our solicitor law firms are authorised and regulated by the Solicitors Regulation Authority (SRA).

Our solicitors also help with commercial claims, such as breach of contract and CCJ removal.

Please note we are not a law firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a franchise case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.