it is my understanding that when signing a contract to become a franchisee, the contract is so iron clad in favor of the franchisor that if the contract is broken, even minimally, the franchisee's rights become terminated. for example, if a franchisee is late on a rent payment for a property which they had originally selected for the franchise and have since made significant repairs and upgrades to the property, the franchisor can take the property from the franchisee (because of the breach in contract by not paying rent) and the franchisee is now s.o.l as far as the location and upgrades are concerned and the franchisor can now sublease the property to a new frachisee with the improvements and the new franchisee would also be responsible for the balance owed on the improvements made by the first franchisee. my apologies for the run on sentence. is there any right or remedies for the original franchisee here? can he/she retain the location in any circumstance? my initial thought is that if the franchisee signed the contract, there is no remedy. however, if the franchisee cannot become a franchisee unless he/she signs the contract as is, is this unfair bargaining power for the franchisor?
1 Answer from Attorneys
Re: franchisee rights
A review of the franchise agreement is a prerequisite to a meaningful reply. In addition you did not detail who owns the realty where the franchise is located nor who is the landlord and whom the tenant. Clearly, I urge you to see an attorney in New York who is versed in the area of franchise law.
Alexander M. Rosenfeld
Rosenfeld & Stein, P.A.
18260 NE 19 Ave
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