Franchise termination is termination of a franchise business license by a franchisor or a franchisee.
Contents
- Franchise termination agreement documents
- Franchise termination notice via franchise fraud
- Franchise termination by threat of frivolous litigation
- Franchise termination legal release
- References
The United States Federal Trade Commission administrates oversight of preinvestment franchise disclusures via The Franchise Rule.
Franchise agreements are regulated in the United States under state law, rather than federal law.
Franchise termination agreement documents
Clauses in the franchise agreement will stipulate grounds for termination, remedies against termination, and the process by either the franchisee or franchisor to start termination. Several states in the U.S. restrict terminations unless there is "good cause," but not all states define this phrase in the same manner.
Franchise termination notice via franchise fraud
A franchisor that is practicing Franchise fraud will typically use a franchise termination process that was not disclosed in the Franchise agreement, Uniform Franchise Offering Circular, or Franchise Disclosure Document. A churning franchise practicing Franchise fraud can have a franchise termination process that includes:
Franchise termination by threat of frivolous litigation
Franchise termination documents can include two sets of documents; threat of Frivolous litigation, and a Legal release document.
The frivolous litigation threat can include claims of unpaid royalties, such as computer license fees, and unpaid future royalties and fees, which were not specified, or agreed to, in the original franchise agreement.
Franchise termination legal release
The Legal release used by a churning franchise can contain clauses such as