Legal Responses to Franchise Termination/Nonrenewal
Franchisors or suppliers sometimes try to terminate the relationship with their franchisee or dealer, even though the franchisee or dealer has done a good job.
Under the prevailing contractual and statutory law of many states, a franchisor/supplier cannot terminate a dealer or franchisee without cause – meaning that as long as the franchisee is meeting its obligations, it can keep the line.
The franchise attorneys of Dady & Gardner, P.A., have enjoyed great success battling franchisors and suppliers over their attempts to terminate franchisees when there is no good cause. We have won court orders preventing the termination and have won money damages (into the millions of dollars) for terminations that we proved were not justified.
These situations sometimes arise because the franchisor or supplier wants to take over a lucrative franchise for itself, or to consolidate its dealerships, or to transfer the dealership or franchise to a favored successor.
Refusal to Renew can be Illegal
Franchisors and suppliers sometimes attempt to achieve the same result as termination through a refusal to renew the franchise or dealer agreement at the end of its term. Many statutes prevent the franchisor from doing so and allow the franchisee or dealer to continue in business so long as the franchisee is capably performing.
Dady & Gardner, P.A., has been able to obtain compensation for dealers and franchisees whose suppliers or franchisors have refused to renew them without good cause and has been able to obtain court orders preventing such nonrenewals and keeping the businesses alive.
To learn more about our recent victories and work that our Dady & Gardner, P.A. attorneys have successfully litigated on behalf of our clients, please visit our Big Wins page.