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Top 4 Lesser Known Tips to Help You Avoid a Franchise Law Dispute (2021 Update)

— May 17, 2021

Starting a franchise these days can be very rewarding as one gets the opportunity to take advantage of an established brand name and existing client base.

A franchise model is one of the most popular and favored concepts in the 21st century. However, not many are aware of the potential causes of a franchise law dispute or how to avoid such possibilities. This write-up focuses on providing you with valuable insight on how to avoid franchise law disputes.

Franchise law disputes can be avoided if you:

  • have proper knowledge about the franchise model,
  • have clear expectations, maintain proper communication, and
  • get into the business only after proper research and legal guidance.

Disputes are neither good for the franchisee nor the franchisor. They often cause irreparable damage to the company’s reputation and result in financial losses to both. Fortuitously, these potential disputes can be avoided altogether if you follow these simple tips:

1. Educate yourself about the franchise model

Believe it or not, most franchise disputes result from a lack of knowledge about the franchise model. Therefore, you must educate yourself about the franchise model’s features before considering getting into the franchise business.

KFC Franchise
KFC Franchise; image courtesy of Bidgee via Wikimedia Commons,

Mistaken beliefs like owning a franchise means you can run the business as your own or as you want or not own any responsibilities of running a franchise. These are some of the common reasons for franchise law disputes. You must understand the meaning of a franchise, understand your responsibilities and clarify any doubts before considering getting into a franchising agreement.

2. Clarify your expectations

Franchise disputes are also caused because of differences in expectations or goals of the franchisor and the franchisee. When both parties are on a different track, it will lead to discrepancies or miscommunication.

The franchisee assumes most business risks but does not have as much control over running the business. The franchisor controls the business’s direction and can change the policies or work-process based on the brand aspiration or other factors. This leads to a lot of disagreements between the franchisor and the franchisee.

It would help each party remain clear about their goals and expectations before consenting to the franchise agreement. This would help them move in a proper direction to lead to both parties’ attainment of objectives.

3. Maintain Clear and Appropriate Communication

Improper or irregular communication can lead to misunderstanding and eventually result in a dispute that might have to be settled in a court of law. Court disputes can be costly and emotionally draining. Neither the franchisor nor the franchisee would want to get into an ugly court dispute. If clear communication is maintained, the possibility of franchise law disputes is reduced substantially.

4. Proper Research and Expert Advice are crucial

Comprehensive research is the pillar of a successful business. Do not rush to get into any agreement. It is best to do thorough research about the viability of the concept and then make the decision. If needed, you can always seek legal advice from experts. It would ensure that you only assume the risk that you are willing to take.

Concluding Thoughts

Starting a franchise these days can be very rewarding as one gets the opportunity to take advantage of an established brand name and existing client base. However, franchise disputes often take an ugly turn and can have dire consequences. Hopefully, this write-up helped you gain quick insight into the possible ways to avoid franchise law disputes. 

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