Dady & Gardner, P.A.

Can my franchisor open a new unit in my exclusive territory?

2026-06-18T20:41:59Z

A potential risk occurs when a franchisor is permitted to open a competing location right next to your franchise. This possible encroachment may be permittable depending on factors such as the language in your franchise agreement and governing state law. When your franchisor sets up shop nearby, you may face reduced profits, decreased customer traffic, and a significant threat to your investment. To protect your income, you first need to understand what this practice means for your business.

Understanding the dangers of encroachment

Business encroachment can occur when a franchisor opens a new location too close to yours. Their location can pull customers away and reduce your sales. Additionally, it can splinter the customer loyalty you built over the years. This creates unfair competition within the same brand and adds pressure to your business. Thus, understanding your territorial rights, or lack thereof, can help you determine how much risk this potential threat poses.

Your territorial rights as a franchisee

Territory rights define your operational area and directly address potential encroachment by other franchisees or franchisor-owned locations. Fortunately, the Federal Trade Commission requires franchisors to disclose whether you get an exclusive area. Additionally, the franchisor must also explain when they can change your territory rights. This is designed to inform you of your protections from the start.  

The two types of territories that you need to know

Your territory rights also decide whether you can stop encroachment before it happens. Hence, you should check your franchise agreement if it grants you one of the two territory types below:

Exclusive territory: Your agreement guarantees you operate as the only franchisee in a specific geographic area, such as a five-mile radius around your location.

Non-exclusive territory: Your franchisor can place other franchises anywhere, including directly next door to your business.

These differences make all the difference in protecting your investment. Once you understand which territory type you have, you can take the right steps to defend your business rights.

Protect your business from unfair competition

You have rights as a franchisee that you must actively protect. Your franchise agreement explains your territorial protections and business rights clearly. Start by reviewing your contract carefully to identify what protections you have.  If encroachment violates your agreement, you can take action to defend your territory. Many franchisees find that professional guidance helps them work through complicated franchise agreements and protect their investments.  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

What qualifies as good cause for franchise termination?

2026-06-18T20:41:28Z

Whether and to what extent legal limits exist on when a franchisor can end a franchise agreement vary from state to state. For example, franchise relationships in Minnesota are subject to legal limits on when a franchisor can terminate the agreement. In Minnesota, termination requires good cause under state law, not on a basis of preference or convenience. These rules protect franchisees from abrupt or unsupported decisions that could disrupt an established business. Understanding this standard and whether it or other standards apply in your state helps you evaluate whether a termination notice follows the law.

Minnesota law defines good cause

Minnesota law defines good cause as a franchisee’s failure to substantially comply with reasonable and material requirements of the franchise agreement. The focus stays on whether the requirement matters to the franchise system and whether the noncompliance is serious. The law aims to prevent terminations based on insignificant or unrelated issues and promotes stability within franchise systems. However, states without strictly defined legal limits on terminating the franchise relationship can create instability in the relationship over issues that may seem innocuous at first glance.

Material contract failures often meet the standard

Good cause often exists when a franchisee fails to meet obligations that affect the core of the agreement, such as required payments, brand standards, or operational rules tied to system consistency. Courts examine whether the failure undermines the franchise relationship rather than isolated mistakes. Substantial compliance, not perfection, remains the general benchmark for judging performance. Typically, without a good cause requirement for termination, the franchisor has increased flexibility to terminate.

Notice and cure requirements apply

Minnesota law requires a franchisor to provide written notice at least 90 days before termination and give 60 days to correct the stated reasons. The notice must clearly describe the conduct that led to termination so the franchisee can understand and address the issue. Limited exceptions allow faster action in narrow circumstances, but the statute sets cure opportunities as the default rule. Franchises within states lacking legal notice requirements are often limited to the language of the agreement.

Facts and fairness shape good cause

Courts consider the full context when evaluating good cause, including past enforcement and consistency across franchisees. Uneven treatment or vague notices can weaken a termination position. Knowing how and whether a state defines and applies legal limits to termination allows you to assess risk, plan responses, and protect your business interests. 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.

Can you refuse to sign an updated franchise agreement upon renewal?

2026-06-18T20:40:48Z

If you are faced with signing an updated franchise agreement at the time of renewal, you may feel like you are facing an impossible choice. Many franchisors present these documents as "take it or leave it," suggesting that your right to operate will simply expire if you do not agree to their updated terms. However, in states with strong franchisee protection laws like Minnesota, the power dynamic is not as one-sided as it seems.

The requirement for good cause

In Minnesota, a franchisor cannot simply fail to renew a franchise agreement without "good cause." Under the Minnesota Franchise Act, good cause is generally limited to instances where a franchisee has failed to substantially comply with the material and reasonable requirements of the agreement. This means that if your business is in good standing, a franchisor may be legally prohibited from ending the relationship just because you have concerns about new, unfair or inequitable contract terms. Instead of a simple expiration, the law often requires the franchisor to prove that their decision to move on is based on a legitimate failure on your part.

Prohibited practices at renewal

Franchisors often include "standard" clauses in renewal agreements that may actually be unenforceable in certain jurisdictions. You should be especially wary of:

General releases: Some franchisors try to require you to waive your right to sue them for past disputes as a condition of staying in the system. In Minnesota, requiring a franchisee to waive rights provided by state law is generally prohibited.

Unreasonable capital expenditures: You can challenge the requirement to pay for major renovations or new equipment just to get a signature on a renewal as an unfair practice.

Substantial fee increases: Significant hikes in royalties or advertising fees that were not part of your original investment expectation may not always be mandatory under "good faith" standards.

Identifying these red flags early can help you determine if the proposed changes are legally sound. If you are presented with a "then-current" agreement that threatens your profitability, do not assume that the countdown to closure has started. In many cases, franchisors are required to provide 180 days of notice before a nonrenewal can take effect. This window is designed to give you time to seek legal counsel and determine if the franchisor is meeting their statutory obligations.

Protecting your investment

Before you sign any document that requires you to give up your rights or pay significantly more for the same brand, review the specific protections available in your state. Understanding the MFA and similar "relationship laws" is the first step in ensuring your business remains yours. 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.

What remedies apply after misleading franchise recruitment?

2026-06-18T20:24:09Z

Fraud or misrepresentation during franchise recruitment can leave you with losses that affect both your business and personal finances. Minnesota law gives franchisees several ways to respond when a franchisor makes misleading statements or hides key facts. Understanding these remedies may help you evaluate your options and protect your interests.

Rescission of the franchise agreement

One common remedy involves rescission. Rescission unwinds the franchise agreement and places both sides back in their pre‑contract positions. Often, a franchisee may recover their initial franchise fee and other amounts they paid to enter the system. Also, courts often require that franchise operations cease once rescission applies, since the franchise agreement no longer binds the parties.

Monetary damages for financial losses

You may also seek damages for losses tied to the fraudulent recruitment. These damages can include out-of-pocket costs, operating losses, and other expenses caused by the misrepresentations. Minnesota law allows recovery when you show that the false statements directly influenced your decision to invest. Financial records, disclosures, and communications often play a key role in proving these claims.

Statutory remedies under Minnesota franchise law

Minnesota franchise statutes provide added protections beyond common-law fraud. These laws prohibit false statements and omissions during franchise sales. When a violation occurs, courts may award damages, rescission, or other relief allowed by statute. In some cases, statutory remedies offer broader recovery than traditional fraud claims.

Equitable relief and court‑ordered remedies

Courts may also grant equitable relief when money alone does not address the harm. This relief can include injunctions that stop ongoing deceptive practices. Equitable remedies focus on fairness and may apply when a franchisor continues using misleading sales tactics. These orders aim to prevent further harm to you and other franchisees. Many franchisees pursue more than one remedy at the same time. For example, you might seek rescission while also requesting damages for losses incurred related to the agreement. Minnesota courts often evaluate how these remedies work together to fully address the impact of fraudulent recruitment. Understanding these options can help you decide how to respond and what outcomes you may seek. 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.

Dady & Gardner, P.A. Announces Expansion with Opening of New East Coast Office

2026-03-05T09:54:10Z

Office to be led by Veteran Franchise Attorney Nicole Liguori Micklich, joined by Attorneys Sam Agostini and Linda Urso

Minneapolis, MN — December 3, 2025 — For Immediate Release — Attorney Advertising — Dady & Gardner, P.A. is pleased to announce its continued growth with the opening of a new east coast office. The expansion reflects the firm’s commitment to serving franchisees, dealers, and distributors nationwide with local presence and nationally recognized expertise. The new east coast office will be led by Nicole Liguori Micklich, a respected franchise and business litigation attorney known for her strategic approach to complex disputes and hands-on client service. Joining her are Sam Agostini and Linda Urso, both experienced practitioners who bring strong backgrounds in franchise, commercial, and regulatory matters. “I am honored to continue representing franchisees and dealers from around the world with some of the most revered members of the franchise bar and to join Dady & Gardner as the Managing Partner of the firm’s Northeast office,” said Nicole Liguori Micklich. “Having worked with renowned litigators from Dady & Gardner in the past, our team is excited to join the firm. With the addition of this east coast office, Dady & Gardner will remain at the forefront of franchisee advocacy in the U.S. and internationally.” Dady & Gardner Managing Partner, Mark Dady, emphasized the strategic importance of the expansion. “Nicole is an exceptional litigator and a highly regarded authority in franchise law. Her dedication to franchisees aligns perfectly with the mission Dady & Gardner has had for over 30 years, and we are thrilled to have her, Sam, and Linda spearheading our presence in the Northeast,” said Dady. “This new office strengthens our ability to provide local, accessible, and highly specialized support to clients nationwide.” The east coast office will serve franchisees, dealers, and independent businesses across the nation, providing the full range of Dady & Gardner services, including franchise litigation, regulatory compliance, contract negotiation, dispute resolution, and system-wide franchisee representation. About Dady & Gardner, P.A. Dady & Gardner, P.A. is a nationally recognized law firm focusing exclusively on franchise and dealer law. The firm represents franchisees, dealers, and distributors in virtually all industries throughout the United States. With decades of experience and a commitment to outstanding client advocacy, Dady & Gardner has been repeatedly ranked among the top franchisee law firms in the nation. Media Contact: Amanda Bekric, Marketing Coordinator at Dady & Gardner, P.A. 612-359-3515 | abekric@dadygardner.com | www.dadygardner.com

What should a new franchisee initially expect?

2026-03-05T09:55:51Z

Some people think that opening a new franchise is an easy task because the franchisee can benefit from the knowledge of the franchisor. The fact is that opening a new franchise takes just as much work as opening any other business. There are several things that you should be prepared for if you’re opening a new franchise. Understanding these may help you to determine if this is a viable option for your new business venture.

Long hours and hands-on involvement

If you’re picturing a passive, turn-key investment, think again. Most new franchisees spend long days—early mornings, late nights and weekends—getting the business up and running. You’ll likely be the first one in and the last one out, especially in the first few months. Hiring and training staff, managing inventory, and handling unexpected issues will fall on you until your team is solid.

Becoming the brand expert

Customers and employees will expect you to have answers, whether it’s how to use the register, where the supplies are stored, or what’s in the secret sauce. Even though the franchisor provides training, there’s still a lot to absorb once you're on the ground. You’ll need to know the menu, services, or product line inside and out, understand your service protocols, and be ready to respond confidently to customer questions. There is a learning curve when you open a new franchise, and there’s no substitute for simply being present. Spending time in every role, from cashier to cleaner, helps build your expertise and your team’s respect. 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.

3 potential benefits of investing in additional franchise units

2025-04-25T13:47:55Z

Buying into a franchise is an excellent way to become a business owner. Franchises help entrepreneurs with investment capital tap into demand for a specific brand’s goods or services. They can bring a popular company to a local audience. Once people are aware of the new franchise location, it may prove to be relatively profitable. The franchisee may want to consider expanding their franchise business by purchasing additional units. They essentially enter into a new agreement with the franchisor allowing them to establish one or more additional franchise locations. They may do so within their current territory or by expanding their territory. There are numerous benefits that franchisees can derive from acquiring additional units during a franchise agreement. The three potential benefits below are among the most compelling for many franchisees.

Rapid expansion

Purchasing new franchise units is a very quick way to scale up the operations of an already successful franchise business and multiply profits. Provided that there is adequate demand in the local region for the goods or services that the franchise offers, each new location can be a source of revenue that can expand the company's overall profitability and market reach. While rapid growth is often dangerous for new businesses, it may be more sustainable in a franchise scenario.

Optimizing talent retention

With a single franchise location, there are obvious limits to the career development of employees. The franchisee only needs one general manager and may only require the services of a few assistant managers or team leaders. They may hire the best and brightest, but those people may then start looking for job opportunities elsewhere when there aren't open positions that allow for upward mobility within the franchise organization. The establishment of new locations can provide opportunities to talent already working at the original franchise location. The franchisee can retain their top talent and can also attract ambitious people who recognize the opportunity that comes from working with a franchisee who has multiple locations.

Sharing services and supplies

Maintaining adequate staffing and necessary supplies for a single franchise location can be challenging. When there are multiple locations in a specific region, the franchisee can potentially use the talent and resources of one franchise location to address issues at another facility. If equipment fails or a worker has a personal emergency, the resources of another location can help ensure that the affected franchise location continues operating without many issues. It can also be beneficial to cross-train between locations to ensure a well-educated and productive workforce. Expanding a franchise operation by acquiring new units can be a smart choice for a successful franchisee. Franchisees often need help planning their expansions and negotiating favorable contract terms. Appropriate assistance when renewing or modifying franchise agreements can make a major difference for those invested in a franchise business who are seeking to expand. 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.

Should intellectual property matter to franchisees?

2025-04-03T18:10:55Z

At its core, franchising involves the use of trademarks, trade secrets, and other forms of Intellectual property (IP). Franchisees are investing in a brand’s awareness, which often derives from name recognition, logos, slogans, and other trademarked items. Investors are also spending money for the ability to access a franchise’s proprietary systems. Due to the significant role that intellectual property plays in a franchise system, it’s important to understand how intellectual property rights impact the operation of a franchise business. Franchisors closely protect their intellectual property, and IP issues in the franchise system have the potential to cause disputes, financial losses, and even the termination of a franchise agreement. For franchisees, protecting their interests means ensuring that intellectual property rights are clearly defined and properly enforced. When a franchisee enters into an agreement with a franchisor, they are essentially paying for the right to use the franchisor’s intellectual property. This includes:

Trademarks – Franchisees benefit from using the franchisor’s name, logo, slogans, and other brand identifiers. These elements attract customers and establish market recognition.

Trade Secrets – Many franchises rely on proprietary methods, recipe,s or operational strategies that give them a competitive advantage. A franchisee must be granted access to these trade secrets while also ensuring their protection.

Copyrights – Marketing materials, training manuals, and digital content used in the franchise system are often copyrighted, meaning franchisees must follow specific guidelines regarding their use.

Patents – Some franchise systems involve patented technology, equipment, or processes that franchisees must use or license under the agreement.

Understanding the importance of these intellectual property assets can help franchisees avoid legal pitfalls and maximize their investment. The value of a franchise depends largely on the strength of its brand. If a franchisor fails to protect its intellectual property, or if other franchisees misuse trademarks or branding, the entire franchise system could be negatively impacted. Franchise investors should carefully analyze a franchisor’s intellectual property. Details on the status of intellectual property are found in Item 13 of the Franchise Disclosure Document (FDD) furnished to prospective investors prior to purchasing a franchise. Prospective franchisees should be cautious about entering a franchise system that has failed to properly register its trademarks with the Patent and Trademark Office (PTO). Some franchisors seek to sell franchises without having any protected trademarks, which could lead to future disputes, and the potential need to rebrand the system. In an effort to protect the system’s intellectual property, franchisors often require their franchisees to follow strict rules on how intellectual property can be used. Unauthorized modifications to a logo, advertising campaign or operational system may result in legal action from the franchisor. Additionally, franchise agreements typically prevent franchisees from using IP after the contract ends, meaning they cannot continue operating under the brand name once their franchise term expires. To ensure a clear understanding of a franchise system’s intellectual property, prospective franchisees should consult an experienced legal team to evaluate the intellectual property clauses. A review by an experienced franchise attorney will ensure that a prospective franchisee can provide numerous benefits, including helping prospective investors:

Ensure that IP rights are clearly defined and enforceable

Understand restrictions on advertising and branding modifications

Confirm whether the franchisor has properly registered and maintained its trademarks

Evaluate post-termination clauses to determine how IP rights apply after the franchise relationship ends

Intellectual property is a foundational aspect of franchising. Franchisees should understand the critical elements of a franchise system’s intellectual property before investing. Further, franchisees can maximize their success by ensuring that they are complying with the intellectual property requirements of their franchise system. 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.

Important Update: Corporate Transparency Act (CTA)

2024-12-27T17:10:20Z

On December 27, 2024, the U.S. Court of Appeals for the Fifth Circuit vacated the stay on a nationwide preliminary injunction in the ongoing Corporate Transparency Act (CTA) litigation. This decision effectively reinstates the injunction, thereby halting the enforcement of the CTA's reporting requirements for now. Previously, the stay had allowed the government to proceed with implementing the law, which mandates that certain entities disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).

With the stay vacated, the original injunction is back in place which bars enforcement of the CTA while the case continues through the courts. This ruling, coming just days after the original injunction was stayed, shows how fluid the situation with the CTA is. Businesses which are subject to reporting obligations should keep in mind the ever changing nature of the CTA’s enforceability and take appropriate steps to be prepared for what may come next.

*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.

Important Update: Nationwide Reinstatement of the Corporate Transparency Act (CTA)

2024-12-26T20:24:04Z

On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit reinstated the Corporate Transparency Act (CTA) compliance requirements by granting an emergency stay of a nationwide preliminary injunction. The injunction, issued earlier in December by the U.S. District Court for the Eastern District of Texas, had temporarily blocked the enforcement of the CTA, including the January 1, 2025, deadline for reporting beneficial ownership information. The Fifth Circuit’s decision allows the CTA to proceed while an expedited appeal is pending, reversing the lower court’s ruling that raised constitutional concerns about the law and its associated regulations. In response to the Fifth Circuit’s ruling, the Financial Crimes Enforcement Network (FinCEN) has adjusted reporting deadlines to account for the time the injunction was in place. Those deadlines are now:

Businesses created before January 1, 2024, now have until January 13, 2025, to file their initial beneficial ownership reports instead of the original January 1 deadline.

Entities created between September 4, 2024, and December 23, 2024, with deadlines during the injunction period, also have until January 13, 2025, to comply.

Businesses created between December 3 and December 23, 2024, are granted an additional 21 days from their original filing deadlines, while those created on or after January 1, 2025, should submit reports within 30 days of receiving the registration notice.

While the ultimate decision regarding the enforceability of the CTA is yet to be made (there will almost certainly be more decisions issues in the coming days), companies that are required to report should be prepared (if they have not yet filed already) to meet the reporting requirements by the newly established deadlines. *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.