3 Ways to End a Franchise Agreement Without Any Strings Attached

Written by GLG Legal

GLG Legal is a leading boutique law firm based in Milton, Brisbane Queensland - Our well-established firm boast a range of high profile clients and has developed a reputation for excellence in service and solutions.

24/11/2020

One of the most alarming things that a franchisee can receive is a breach notice. This document specifies what one has allegedly done wrong to warrant a breach of the franchise agreement with the franchisor.

While it can be remedied with the right steps, doing so may feel like a daunting and complicated task—which is where legal aid comes in. Finding professional help from a legal firm in Milton will ensure that you understand and respond to the breach correctly.

Here are the steps you should take to handle a franchise dispute:

  1. Understanding the Requirements of the Breach

Many parties commit the common mistake by failing to read and fully understand the breach notice alongside the franchise agreement. There are many details that your franchisor will have included in the breach, including the deadline by which you should remedy it.

Your breach notice should specify the alleged wrongdoing that led to a breach of agreement, as well as the action the franchisor wants you to take in order to resolve it. It’s important to follow this to the last detail; abiding by all of these specific instructions within the deadline but missing out on any aspect can still be considered grounds for the termination of the franchise agreement.

  1. Resolving the Breach

There are times when the remedy to a breach is simple, such as fulfilling an overdue payment or making sure to restock the approved products. Easy fixes such as these should be resolved immediately, and evidence should be provided to the franchisor.

In some instances, the franchisee may not agree with the alleged breach or that the action required to provide the remedy, which is where negotiations with your franchisor will take place with the proper legal advice. Different circumstances may require different timelines for the remedy of a breach. However, most cases will say that a franchisor doesn’t need to give more than thirty days’ notice for resolution.

Franchisors may not always provide enough information regarding the breach notice to substantiate allegations, so as soon as you receive the breach and have read through it, ask for more information from the franchisor.

  1. Taking Action After Establishing an Inability to Resolve the Breach

Some cases will result in an inability to resolve the issue with the franchisor, in which case a franchisee can invoke the franchise dispute resolution procedure under the franchise agreement.

Simply put, this procedure calls for the resolution of the dispute, which may either end in a resolved breach or the call for mediation. It’s important to remember that while a franchisee can invoke this procedure, it can still allow a franchisor to terminate the franchise agreement if the breach notice isn’t complied with.

What Happens When a Franchise Agreement is Terminated?

Should the franchise agreement terminate due to the franchisee’s fault, they must fulfil certain contractual obligations, such as stopping the franchisor’s trademarks, agreeing to a non-compete clause, the payment of all amounts due, and an agreement not to use trade secrets.

Franchisors and franchisees should also remember that there are penalties for breaking the Code, some of which can amount to thousands of dollars per breach, which highlights the need for strict compliance. Seeking legal advice from a Milton law group should be one of the first priorities before taking steps to terminate a franchise agreement.

Conclusion

The termination of a franchise agreement can be simple in some cases and complicated in others, and the breach can occur on either side, whether it’s the franchisee or the franchisor. By enlisting the best legal help possible, you can ensure that whatever agreement is reached will be accomplished with all legalities observed. Even in a franchise agreement termination case, a legally and financially safe procedure can only be done with the right legal guidance.

Here at GLG Legal, we provide clients with real-world solutions to meet commercial and property needs. We pride ourselves on our innovation, ideas, and results to give our clients the best service. If you’re looking for the best law firm in Milton, contact us today!

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