Disputes Concerning the Franchise Agreement
The Franchise Agreement is the cornerstone of the franchising relationship. Although not every future dispute can be predicted at the time of the creation of the agreement, expert assistance at the onset is the best way to provide your company with legal protection. Our franchise lawyers analyse and draft franchising agreements for companies and can be relied upon to draft all contracts with confidence. Disputes arising due to the franchise agreement often involve unclear clauses on agreement termination, restrictive covenants, non-competing clauses and non-provision of support, training and guidance by the franchisor. Our German franchise dispute lawyers will advise you on key terms within the franchise agreement, such as the planned duration of the franchise, the support and training provided to franchisees, the renewal of the franchise, the termination of the agreement, non-competing clauses and what happens in the event of the sale of the franchisor business.
Tailored franchise agreements are a necessity for preventing future franchise disputes from arising. How your company’s franchise agreement should be designed will depend on many factors from the number of franchisee companies, the industry of the company, the plans for future growth and more. Standard contract templates leave franchisors open to legal disputes in the future and should be avoided. Contact our German franchise lawyers and allow them to design the agreements with your company’s business model, characteristics and goals central to the design.
Exit from the Franchise
Franchise agreements should work to benefit both the franchisor and the franchisee; however, this is not always possible. Franchise agreements tend to be in place for 5-year periods, but it may be the case that one of the parties wishes to end it early. Reasons for seeking the termination of the agreement may be due to a lack of profitability, disagreements over the provision of training and support, conflict regarding territory and even more serious disagreements such as alleged fraud. Including termination clauses within the franchise agreement itself is one way to clarify when the franchisor or franchisee can exit from the agreement. Our lawyers will advise you on these clauses and aim to have them included should they be in your interest. However, it is unlikely that all possible reasons can be included within the document.
In scenarios without a set exit clause, it may be necessary to have a negotiated exit. On the franchisor’s side, a franchisee that is uncooperative may lead to brand reputational damage if they act in an antagonistic manner. Of course, should such actions be in breach of the franchise agreement, there may be grounds for litigation, but this can be a time-consuming and costly endeavour. Sometimes a “clean break” before the end of the term is advisable. Our lawyers will oversee the negotiated exit from the franchise in such cases.
Should franchisees seek an exit from the franchise agreement before the end of the term, they should contact a legal professional in advance of taking such actions. Our German franchise dispute lawyers will carefully analyse your current situation, including the business model employed, and will determine how best to resolve the issue. Uncooperative actions taken without prior legal advice may violate the agreement and lead to costly legal conflict.
Dispute Resolution by Arbitration & Mediation
Mediation and arbitration are more cost-effective and time-efficient means of dispute resolution than litigation. Both mediation and arbitration also provide the parties with more control over the final arrangements and can be conducted privately. Mediation, in particular, allows for flexible and creative solutions that may be better suited to lengthy litigation resolution. It is also suitable for resolving conflicts more amicably and can contribute to less adversarial problem-solving in the future. Our lawyers are ready to act as mediators in your franchise disputes and facilitate discussion to resolve disputes. Allow our franchise dispute lawyers to bring their insight and experience to the table in the role of mediators.
Mediation is not always successful, and arbitration presents itself as another avenue of conflict resolution. Mediation is a more informal process, but it lacks the protections provided by arbitration or litigation. Mediation agreements are often non-binding, and the process itself is difficult to predict. In comparison, arbitration offers binding resolutions to conflicts while maintaining flexibility and confidentiality.
Arbitration involves more privacy and can also be applied more flexibly to resolve specific disputes than standard litigation. At Schlun & Elseven Rechtsanwälte, our arbitration lawyers will advise your company on preparing for such proceedings. We can also be relied upon as arbitrators in the conflict. With our industry-specific knowledge in a range of different sectors, our lawyers are equipped for disputes. Ad hoc proceedings can resolve issues requiring immediate solutions. More complex conflicts, or those with an extended deadline, can have more institutional mechanisms to provide greater structure and certainty in its resolution.
Not all disputes should be concluded by these methods, and there are occasions when litigation is necessary. Working alongside German franchise lawyers will ensure that you receive comprehensive counsel on how best to tackle the issues facing your franchise.