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4 leading causes of franchise disputes

On Behalf of | Aug 24, 2023 | Franchise Agreements

From hotels and restaurants to gyms, tech and retail, franchise opportunities exist in pretty much every industry. And if you get everything right, buying into an already established brand can provide amazing opportunities for your entrepreneurship journey. 

At the very basic, a franchise is an arrangement where an already-established business sells to you the right to market the company’s products and services within a specific jurisdiction at a fee. Unfortunately, disputes between franchisors and franchisees are not uncommon; and if they happen, the repercussions can be far-reaching. So how do these franchise disputes happen?

Here are four common causes of franchise disputes:

1. Inadequate support

A franchise agreement will most often articulate each party’s entitlements and responsibilities. For instance, the agreement may require the franchisor to provide a certain level of support for a specific duration. Depending on the industry, this might range from technical to branding and marketing support. If this does not happen, leaving the franchisee feeling abandoned, a dispute might arise. 

2. Disputes over fees

Sometimes, you may see the franchise fees and royalties you are paying to the franchisor as simply unfair or undeserved. This is especially true if the support they are providing is not commensurate to the fees you are paying. 

3. Marketing disputes

Depending on the terms of engagement, both the franchisor and the franchisee may be responsible for the marketing costs. If you are paying the marketing fees, and the other party isn’t, a dispute is likely to arise, especially if you believe your money isn’t going to the right use. 

4. Communication disputes

Communication is the fuel that propels any relationship, including the franchisor-franchisee relationship. Unfortunately, if the franchisor is not communicating as they should – like failing to submit marketing materials in time, then you may feel left in the dark, and this can cause disputes. 

As much as you might dread them, disputes are not uncommon in the franchising world. And these disputes can arise at any stage in the franchise journey. Understanding how Minnesota franchise laws work can help you safeguard your rights and interests while dealing with franchise disputes. 

NOTICE: 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.