Chicago Business Litigation Lawyer Blog
In the world of franchising, the termination of a franchise agreement can be a complex and contentious issue. Franchisees facing termination must understand their rights and the defenses available to them. Equally important is choosing the right legal representation to navigate these challenging waters.
Defenses to Franchise Termination
- Breach of Contract by Franchisor: If the franchisor has failed to uphold their end of the franchise agreement, this can be a strong defense. Examples include not providing agreed-upon support or infringing on the territory rights of the franchisee.
- Lack of Proper Notice: Franchise agreements typically require the franchisor to provide notice before termination. If this procedure is not followed, it can be a valid defense.
- Unreasonable or Unjust Termination: Franchisees can argue that the termination is unreasonable or unjust. This might be the case if the franchisor terminates the agreement without a valid reason or for a minor infraction that could have been resolved.
- Good Faith and Fair Dealing: Franchisees can contend that the franchisor did not act in good faith or deal fairly. This is a broader defense that encompasses various actions by the franchisor that might be deemed unfair or oppressive.
- Discrimination: If the termination is based on discriminatory reasons, this can be a legal defense, especially if it violates state or federal laws.
- Retaliation: If the termination is in retaliation for the franchisee exercising a legal right, such as reporting violations, it can be contested legally.