Buying a Master Franchise can offer an exciting business opportunity for those seeking a larger investment than simply acquiring a unit franchise, equally with the anticipation of greater profits.
Q: What protection do I have against the franchisor not keeping its side of the agreement? Is there not a David and Goliath-sized difference in the recourse I have in case of dispute?
A: Size doesn’t matter
The fact that the Franchisor is likely to be a much larger company with greater resources than an individual franchisee, does not automatically mean that a franchisee cannot obtain recourse if problems occur.
The franchise agreement should set out the obligations to be performed by the Franchisor which could result in a claim for breach of contract if the Franchisor does not perform.
Secondly, the Franchisor may be found to have negligently or fraudulently misrepresented the business opportunity and this can also result in a successful claim.
The key to success often lies with the quality of evidence that the Franchisee is able to produce, in support of their claim. It is important to document meetings and to retain emails and correspondence before the franchise agreement is signed. With strong evidence positive action can be taken even where the Franchisor appears to have the upper hand in terms of resources at its disposal.