Case Study Franchise Agreement Disputes Negotiation And Venue Problem

Writen by Lance Winslow

Most franchise agreements require that the franchisee or franchise buyer sign an arbitration clause in case of a dispute. Of course these are hard to get out of and generally the franchisor will pick the venue, most likely the city where they are located. This makes things tough on franchisees, which find themselves in disputes.

Lets say the Franchisor is Texas based and the franchisee is in Washington State; well then Texas only helps Texas Residents and or Texas Businesses and you are in Washington State. Washington State only helps Washington State residents and it is a civil matter now and Washington State can only require rescenssion and 3-times return of money paid out, and only if misrepresentations were made or fraud occurred during the sale of the franchise for instance and you cannot prove that Bob Smith gave you a verbal earnings claim.

Meanwhile, you are looking for something else wrong in the discloser docs, which kind of makes sense if Bob Smith or the company has a habit of lying then most likely there is something in the docs which are misrepresentative and then again the burden of proof is on you.

And everything costs money, such as discovery and lawyers to help you interface with bureaucrats as they rarely listen to citizens mostly lawyers? What an interesting game all this is. Too bad no matter what you, the franchisee will lose, because even if you win, you will pay all your winnings to your lawyers most likely.

The proper venue actually is to arbitrate in Texas unfortunately due to the agreement ahead of time to do so, but not if there was fraud then you could sue the crap out of them of course I guess. Of course if you do and if it kills the Franchising Company all the franchisees could lose everything too? The franchising company might BK, and no one wins but lawyers in fees.

This type of scenario is all too common in franchising and it is unfortunate for the business community, because franchising quite typically is probably the greatest business format every created in the history of human commerce. Consider all this in 2006.

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