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Business Franchise Disputes

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What Is a Business Franchise?

A business franchise is where one party allows another to utilize their company’s marketing techniques, materials, and logos to start another branch of the company. This is common for businesses such as fast-food chains and retail department stores. The main company is called the franchisor, while the party starting the new chain branch is called the franchisee. The franchisee typically purchases rights to use the material and business processes from the franchisor.

What Are Some Common Business Franchise Disputes?

Business franchise opportunities are often considered a straight-forward way of starting a business. It can be less complicated because the business owner usually just needs to follow the guidelines provided by the franchisor. However, franchise disputes can still arise. These may include:

  • Trademark or copyright violations, such as using the franchise logo for personal use
  • Unauthorized disclosure of trade secrets
  • Failure to follow company policies, such as instituting new changes to business operations
  • False advertising or unfair business marketing practices
  • Breach of business contracts, such as outsourcing the work without consent or hiring undocumented workers

Thus, most franchise disputes involve some cases where the franchisee has strayed away from the guidelines and intentions of the franchising company. For this reason, it is important that both parties be clear regarding the limitation and scope of what the business owner can and cannot do.

However, some cases may involve other types of violations, such as where the franchisee is suing the franchisor because they refuse to provide them with payments or benefits.

What Are the Legal Remedies involved in a Business Franchise Dispute?

Franchise disputes often involve some sort of breach of contract. These may be remedied by a damages award, which is a monetary amount that is paid to the non-breaching party. For instance, a franchisee may be required to pay compensation for losses caused by disclosing trade secrets, or the franchising company may be required to pay losses associated with withheld wages or benefits.

Other remedies may include an injunction that prohibits certain behavior, or an injunction that requires one of the parties to transfer property rights.

Do I Need a Business Lawyer?

Franchise disputes can often involve very specific types of business conflicts. You may need to hire a lawyer if you need help filing a claim for a business franchise dispute. Your attorney can provide you with legal assistance and representation during the process. A qualified business lawyer can help ensure protection of your rights and interests during the lawsuit.

Photo of page author Jose Rivera

, LegalMatch Legal Writer

Last Modified: 05-05-2014 02:39 PM PDT

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