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Is it time to cut ties with a franchisee?

| Jun 11, 2020 | Uncategorized |

If you are the owner of a franchise, one disagreeable task that may become necessary is the removal of a franchisee. This may have been in the pipeline for a long time due to underperformance or other issues. Alternatively, it could have arisen out of the blue due to an egregious public action on the part of the franchisee.

Either way, it is a serious step to take, so you want to ensure that you have legal grounds to remove your franchisee. Below is some information you may find helpful when making your decision.

They are underperforming

The financial strains of 2020 are unprecedented, and if there is ever a time to cut a franchisee some slack, now would be that time. With that being said, however, if your franchisee has consistently been coming up short of the stated sales goals, this latest setback may prove more than they are able to weather. Lower the boom.

Franchisee acts objectionably in public

Long gone are the days when business owners could make racial slurs or other egregious comments to their staff, customers or the public. Everyone has a cellphone with a camera to record these incidents and shame the perpetrators. If one of your franchisees damaged the brand by talking out of turn or doing some other odious act, you may be able to cut ties with them over this lapse of judgment.

Mutual parting of the ways

Sometimes, what appeared to be a good fit in actuality is a complete mismatch. If both you and your franchisee come to this conclusion together, you can arrange an exit interview that can help you learn how to avoid these problems in the future.

Stay within the law on your decision

Both you and your franchisee have rights and responsibilities regarding your franchise agreement. You want to ensure that all your actions and decisions are above board, within the law and also the parameters of the franchise agreement.

A business law attorney here in San Juan Capistrano can advise your every move to make sure that you remain compliant at all times. Should the matter end up in court, they will be your advocate at all phases of the process.