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As a franchisor, you will have worked hard to develop a successful brand so when you sign a franchise agreement, you will expect to receive a certain level of commitment from your new franchisees.
However, if you find that the franchisee isn’t operating within the terms of your franchise agreement as expected, then depending on the issues involved, you may be able to raise a dispute due to a breach of the contract.
- Non-performance and under performance
Your brand’s reputation and commercial success are built on successful franchisees delivering a product or level of service that reflects well on your company.
A weak link – i.e. a franchisee who repeatedly fails to deliver, can erode the overall quality of your brand, which is why it is so important to clearly outline in the franchise agreement the standards you expect from your franchisees.
As a legal contract, a failure to meet the terms of the franchise agreement – either as a result of non-performance or under performance, is sufficient grounds to terminate or refuse to renew the franchise.
- Trading outside authorised franchise agreement
The terms of your franchise agreement should clearly state the requirements you have in place to protect the integrity of your brand; for example use of authorised packaging, good and materials and even marketing support.
If your franchisee opts to use unauthorised goods or services, they may be found to have breached the terms of your original agreement and sanctions could be applied depending on the terms and conditions of the original contract.
- Post termination restrictions
Some franchisees who experience initial business success may be tempted to strike out alone when the agreement comes to an end. You may be able to include restrictive clauses to prevent them setting up in competition within a certain period of time after the franchise agreement has ended. However, it is important to seek specialist legal advice from our team as the restrictions need to be carefully drafted to avoid legal challenges.
