Franchising is a popular business model in Canada, with many entrepreneurs opting to start a franchise rather than building a business from scratch. However, like any business arrangement, disputes can arise between franchisors and franchisees. These disputes can be related to a variety of issues, such as franchise fees, marketing requirements, and territorial rights. To avoid costly litigation, it’s essential to have a detailed franchise agreement in place and to maintain accurate records of all transactions in your minute book.
As a franchise lawyer, we’ve seen several common disputes that arise between franchisors and franchisees during minute book audits. Here are a few examples and how to resolve them:
- Disputes over royalties and franchise fees
One of the most common disputes between franchisors and franchisees relates to royalties and franchise fees. Franchisees may argue that the fees are too high, while franchisors may argue that franchisees aren’t meeting their obligations under the franchise agreement. It’s essential to have a detailed franchise agreement in place that outlines the responsibilities of both parties and the consequences of non-compliance.
- Marketing requirements
Franchisees may dispute marketing requirements, such as mandatory advertising campaigns or the use of certain logos and slogans. It’s crucial to have clear guidelines for marketing requirements in the franchise agreement to avoid confusion and disputes. It’s also important to keep accurate records of marketing expenses in your minute book.
- Territorial rights
Franchisees may dispute territorial rights, particularly if they feel that the franchisor is encroaching on their territory by opening another franchise location nearby. It’s essential to have clear territorial rights outlined in the franchise agreement and to keep accurate records of territory boundaries and any changes made to them.
If a dispute does arise, the first step is to try to resolve it through negotiation or mediation. If these methods are unsuccessful, the dispute may need to be resolved through litigation. Having a detailed franchise agreement and accurate minute book records can help to resolve disputes more efficiently and avoid costly litigation.
In conclusion, maintaining accurate minute book records is essential for franchisors and franchisees to resolve disputes efficiently and avoid costly litigation. If you’re a franchisor or franchisee in need of legal assistance, contact a franchise lawyer at Falcon Law PC. Our experienced lawyers can provide you with guidance and representation to protect your interests and help you navigate the complex world of franchising. Contact us at 1-877-892-7778 or info@falconlawyers.ca for more information.
