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Franchise Sales, Terminations, and Renewals

Several states have enacted their own franchise laws. We will assure that all registration requirements are fulfilled so that franchisors may sell in their various jurisdictions of choice. Additionally, our office handles any amendments or addenda to the franchise agreements or disclosure documents for purposes of state law compliance.

It is imperative to do a thorough analysis of all pre-termination options where a franchisee is not in compliance with its obligations under the franchise agreement. In many cases, under the right circumstances, franchisors may prefer options that do not involve immediate termination, but instead motivate franchisees to cure their default so as to continue as a profitable business.

Several states have enacted laws that govern the termination or non-renewal of franchises. Some states provide for an “infinite” franchise benefit, wherein, as long as franchisees substantially comply with the franchise agreement, the franchisor cannot refuse renewal nor terminate without “good cause.” However, in other states the there is no assumption of renewal and if the franchise agreement does not explicitly state terms of renewal, then the agreement automatically terminates at the end of the stated terms.

In states that have a statute regarding franchising laws, the state law will supersede any less stringent requirements in the franchise agreement. Furthermore, a state may have a longer cure period than the cure period provided in the franchise agreement.

If you need assistance with the termination or renewal of a franchise, please contact us.

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