Franchise Breach of Contract in Georgia

A franchisor’s relationship with its franchisees will grow and develop over time, but at its foundation, that relationship is governed by the franchise agreement and the related contracts attached as exhibits to the Franchise Disclosure Document (FDD). If that relationship flounders, the franchisor can be drawn into a lawsuit or arbitration over a franchise breach of contract in Georgia.

The franchise litigation attorneys at Franchise.Law have represented franchisors in contract breach matters throughout the United States. We are licensed in North Carolina and Florida and are not licensed in Georgia, but franchise regulation is primarily federal, and we work with local counsel when a Georgia court or arbitration proceeding requires it. We use that experience to resolve franchise contract breach disputes in the most effective and efficient manner possible.

What Are Some Common Franchise Contract Breach Situations?

A Georgia franchisor or a franchisee can face franchise breach of contract allegations if they do not adhere to the material terms and conditions of the franchise agreement. Many franchise contract breach lawsuits are based on:

• A franchisee’s underpayment or nonpayment of royalties and other fees
• Violations of operational guidelines, such as quality or cleanliness standards, and product or service offerings
• Territory violations, for example, where a franchisor licenses a franchisee to operate in another franchisee’s territory, or a franchisee extends its services outside of its authorized region
• Sales or transfers of controlling interests in a franchisee’s business to a party not approved by the franchisor
• Arguments that a franchisor is not providing adequate or promised levels of support

When Franchise.Law prepares a franchisor’s franchise agreement, we work to define every critical term clearly so there is no ambiguity to litigate later if a breach occurs. With a sound legal foundation, a breach of contract lawsuit that addresses these or other matters will focus primarily on the facts that are established by objective evidence.

What Remedies Might Be Available for a Franchise Breach of Contract?

Money damages are the primary legal remedy that a Georgia franchisor might seek in a franchise breach of contract dispute. Where a franchisee has underpaid royalties or marketing fees, those damages would be equal to the amount of the underpayment. Under other circumstances where the franchisee substantially fails to fulfill its FDD obligation, the franchisor might seek to terminate the franchise agreement and end the franchise relationship.

Ideally, the franchise agreement will include terms and conditions that define each party’s rights and remedies in the event of a breach. Given that those terms and conditions address the possibility of a failed franchise relationship, the parties are sometimes reluctant to negotiate them in detail. Contractual remedy provisions, however, are an effective form of contingency planning that can eliminate arguments over remedies for a breach.

In some states, for example, a franchisor that seeks to rescind a contract following a franchisee’s breach might be obligated to refund some or all of the franchisee’s initial fee payment. A well-drafted franchise agreement, like the ones prepared by the lawyers at Franchise.Law, can enable a franchisor to retain a larger portion of those fees, to repurchase equipment with discounts for depreciation, and to cover the franchisor’s losses.

Consult Franchise.Law for Advice Regarding Franchise Breach of Contract Disputes in Georgia

Litigation over franchise breach of contract in Georgia can place strains on a franchisor’s time and financial resources. When you consult with Franchise.Law, we work to minimize litigation risks with solid contracts that clearly define each party’s obligations. If a breach of contract does occur, we work to resolve the dispute in ways that best serve your interests.

Please call us for advice and counsel about franchise breach of contract.