Posted on April 11, 2021 in
Written by: David B. Honig
Franchise relationships are governed by antitrust laws such as the Sherman Act and the Robinson Patman Act. These laws mainly concern contracts or conspiracies that restrict trade or discriminate against pricing. Two important types of agreements can restrict trade in violation of antitrust rules: horizontal and vertical agreements. Horizontal restrictions have rules that limit trade between competitors at the same level of market structure. Vertical restrictions involve agreements between players at different levels of a market structure. Allegations of horizontal conspiracy are examined as part of a stricter “per-per-per- own” approach, while vertical conspiracy charges are examined under the rule of reason. If you are in a situation of termination or non-renewal, you must act immediately. From a legal point of view, it is much easier to maintain a deductible before the termination or non-renewal date than to ask a court to reinstate it once it has been lost. In addition, if you lose your deductible, you will also lose the income you need to pay for the upcoming lawsuit. Most franchise agreements also contain conditions that prevent you from working in the same sector for a certain period after termination, impeding your ability to continue to earn a living during or after the legal battle. Time is crucial to effectively combat illegal dismissals or non-renewals. False non-renewals of franchises have unfortunately become a normal, if gigantic, risk of being franchised.
Franchisees and merchants are regularly faced with the possibility of not renewing their franchise or dealership contracts. Like illegal terminations, illegal non-renewals of such agreements by franchisors, suppliers or manufacturers threaten to destroy the businesses and personal finances of franchisees and merchants who have worked for their contract terms. Often, when the initial franchise or dealership agreement sends, franchisees or merchants have already worked all their adult lives to create their successful but not renewed businesses. Some states have statutes that stipulate that a franchisor cannot terminate a contract without a “good reason” within the meaning of the statute. For example, a franchisor should be able to prove that your franchise is not paying its licence fee or advertising fees or that it is in some way violating the health and safety requirements to terminate the contract. As long as the deductible meets a minimum standard, the contract must remain intact. Some states, such as California, allow, in some cases, the non-renewal of a franchise. California allows non-renewal after 180 days for certain reasons, such as. B the failure of a franchisee to accept the standard terms of the renewal deductible. In Connecticut, the franchisor cannot renew the franchise if the franchisor sells or transforms the premises on which the franchise is located for another use.