In my last post, I discussed the levels of franchisor assistance when picking a location. In this post, I will discuss timing. In today’s world, most franchisees sign franchise agreements before picking a location. Many franchisees believe that finding a location will be simple and that a real estate broker can help them without issue. The reality, unfortunately, is that picking a location can be one of the most difficult stages in the process. Making matters worse is that franchise agreements often have strict site selection deadlines. The failure to pick a site typically allows franchisors to terminate the franchise agreement and seek damages (and keep your money).
Of course, most franchisors will extend your time to find a location if they feel you are making good faith efforts. However, from a legal standpoint, most franchise agreements are unforgiving with respect to site selection deadlines and do not specifically provide for extensions. If a franchisor has interest in your territory, has decided you might not be a good fit after all, or has reservations about you for any reason, you may find yourself getting extra pressure from the franchisor or even a termination notice.
New franchisees must keep in mind that the failure to select a site in a timely manner can be fatal. Extensions must be documented in writing to avoid confusion, and franchisees should be sure to document all requests for site approval from the franchisor. Franchisees who believe their franchisors are unreasonably turning down potential sites, and causing a delay in the process, should retain counsel immediately.
If you have any questions about this topic or any other franchise law issue, please contact Brian Loffredo at
ABOUT BRIAN LOFFREDO
Brian is a commercial litigator with more than seventeen years of experience representing clients in the franchise industry. Brian routinely assists clients during the licensing and franchise/FDD review process, as well as with the resolution of franchise-related disputes, including those involving terminations, territorial disputes, fraud, disclosure/relationship law violations and breaches of contract.
In addition, Brian represents and counsels clients in the construction industry on matters involving litigation, construction defects, licensing and compliance, collections, mechanic’s liens, payment bond and Miller Act claims, contract drafting, and compliance with home improvement laws and other construction industry laws.
Brian also has extensive experience representing financial institutions with workouts, collections and residential / commercial foreclosures.
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