Franchise Disputes

Even well-run franchise systems generate disputes. The relationship is long, the contracts are detailed, the money is real, and the interests of franchisor and franchisee don’t always line up. Most disputes don’t end up in court, but they all need to be handled the right way, because how a dispute is managed often matters more than the dispute itself.

The most common categories include:

– Encroachment, when a franchisor opens a new unit or channel that the franchisee believes is inside their territory.
– Termination, when the franchisor moves to end the relationship, usually for a claimed default by the franchisee.
– Non-renewal, when the term of the franchise agreement is ending and the franchisor declines to renew.
– Transfer disputes, when a franchisee wants to sell or transfer the business and the franchisor pushes back on the buyer, the price, or the terms.
– Fee and royalty disputes, disagreements over what’s owed, how it’s calculated, and what audit rights the franchisor actually has.
– Quality and compliance issues, when the franchisor believes the franchisee isn’t meeting brand standards, or when the franchisee believes the franchisor isn’t delivering on what was promised.
– Fraud and misrepresentation, claims that the franchisor’s FDD or sales process gave a false picture of what the franchise would deliver.

For franchisors, the goal is usually to resolve the dispute quickly, protect the system from precedent that will create more problems, and keep the brand intact. That sometimes means a quiet negotiation. It sometimes means a firm enforcement action. It occasionally means trial. Victoria advises on how to read the situation and choose the path that actually serves the system, not the path that feels most satisfying in the moment.

For franchisees, the goal is usually to protect the business you built and the money you invested. That can mean negotiating a sensible exit, defending against an unfair termination, pursuing a wrongful non-renewal, or pushing back on encroachment. The same principle applies, match the response to the situation, and keep the focus on the result you actually need.

Most franchise agreements include mandatory arbitration or mediation provisions. Many include venue clauses requiring disputes to be handled in the franchisor’s home state. Some include attorneys’ fee provisions that change the economics of any fight. Victoria reads the contract, reads the situation, and recommends a path forward that’s grounded in what’s likely to actually happen, not in what the loudest party wishes would happen.