Exiting A Franchise Agreement

For more information about the franchise service we offer, please follow this link. It`s easy to get in, not always to get out so easily. But understanding the rules surrounding the exit of a franchise helps. The existing franchise agreement will either be awarded to the buyer or more often the buyer will enter into a new franchise agreement with the franchisor. While an early termination of the agreement may seem like a drastic step, it is counterproductive for franchisors to keep franchisees in business if they do not want to attend. If they are not enthusiastic about their work and are committed to moving the brand forward, the franchise unit will likely suffer, which will have a negative impact on the company as a whole. Home > Blog > Can I terminate my franchise agreement? Business runs reasonably according to plan and everything is good if you have an unexpected personal problem, illness or other family changes, which means you now have to watch leaving the franchise. However, not all franchise relationships work. Sometimes owners or operators want to terminate the franchise agreement prematurely. There are several steps you need to take to ensure that termination is legal and does not cause financial hardship. Franchise agreements generally do not allow a franchisee to terminate the franchise agreement.

The only obvious exception to this rule is that if you change your mind shortly after the agreement is reached, the code provides for a seven-day cooling-off period. This would be reflected in your franchise agreement. This will crystallize a loss and expose a franchisee to a charge of breach of the franchise agreement and a claim for loss and damage on the part of the franchisor. The franchisee will also generally be subject to a commercial restriction and will not be able to operate a similar business in competition with franchised activities. Franchise mediation focuses on two categories: examples of franchises are H-R Block Tax Preparation, Stanley Steemer`s carpet cleaning service and the ubiquitous McDonald`s restaurant. The ACCC governs the Franchise Code of Conduct (code), a binding sector code applicable to parties to a franchise agreement.