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4 common kinds of contract breaches that can hurt your franchise

On Behalf of | Apr 4, 2023 | Breach Of Contract

Contracts are the backbones of franchises. However, if a contract is breached, it can cause serious damage to your business, no matter what kind of franchise you operate.

To better understand how a contract may be breached, here are some of the basics you should know:

1. Actual breaches

Simply put, an actual breach happens when a breaching party just doesn’t fulfill their end of a contract. When this happens, the non-breaching party may seek damages. For example, your franchisor could fail to provide you with the system training you need, per their obligation.

2. Anticipatory breaches

In some cases, a contract breach may not have yet occurred. Instead, one of the contracted parties is aware that a service or product won’t be provided according to the agreed terms. This kind of contract breach may be considered anticipatory.  For example, your franchisor could notify you that they aren’t including your location in some big marketing campaign, even though you had an agreement.

3. Minor breaches

Once a product or service is provided, the non-breaching party may find that there was a minor breach. That means something small wasn’t done according to the contract – this may be ultimately insignificant, but can still lead to a legal battle if the matter isn’t resolved. For example, maybe the franchisor failed to deliver a box of promotional materials a week early, but they do get there the morning the promotion starts. You may or may not suffer any losses as a result.

4. Material breaches

Conversely, material breaches are often a lot more significant because they may lead to big losses. In some cases, a material breach may even lead to the non-breaching party excusing themselves from fulfilling their end of a contract. For example, you could invest a lot in a franchise only to have your opening delayed again and again because the franchisor is having financial or legal issues. That could ultimately void your agreement.

If you believe a contract was breached, then you need to be aware of your legal rights in order to protect them. Experienced legal guidance can help.

This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.