Posted by Elizabeth Gore-Jones
on 1 December 2022
Parties to a dispute will often act as if they are not bound by a franchise agreement when a dispute arises.
This may take the form of a franchisee ceasing the operation of the franchised business, failing to make franchise payments, ceasing to attend training or return franchisor phone calls or emails.
Franchisors may stop a franchisee from having access to the operations manual or the franchise system intranet with a view to protecting its intellectual property.
In the absence of a specific right in the franchise agreement to take these actions or cease taking certain actions (as applicable) this may put either party in breach of the franchise agreement.
Both parties continue to be bound by the franchise agreement even if a dispute has arisen.
If a breach then occurs the non-breaching party may then issue a Notice to Remedy breach which may put either party in a worse position or lead to a greater complication of the matters in dispute.
In the absence of agreement, both parties must continue to comply with the franchise agreement even if a dispute has arisen.
