Franchise Agreement Attorneys in Houston
Texas Franchise Lawyers With 100+ Years of Combined Experience
Franchise agreements and disputes can put a lot on the line, including the success of your livelihood. Whether you are seeking advice on a franchise agreement or FDD to protect your interests and reduce risks, or you need to take immediate action to resolve a dispute through mediation or arbitration, working with experienced legal representation can make all the difference.
At Hendershot Cowart P.C., our Texas franchise lawyers have earned national recognition for their ability to protect the interests of clients with proactive and responsive legal counsel. We represent both franchisors and franchisees.
Proactive Legal Counsel for Franchisees
Proactively establishing safeguards is critical to protecting your rights and interests, and having grounds for legal remedies when things don’t go as planned.
Our business franchise attorneys advise clients on a range of proactive measures relating to:
- Business formation, franchise sales and purchase
- Drafting, reviewing, and negotiating franchise contracts (royalties, fees, reporting, audit, default, etc.)
- Franchise disclosure documents (FDD) reviews
- Partnership / employment agreements
- Confidentiality, nondisclosure and non-compete agreements
- Independent contractor / work-for-hire agreements
- Transfer restrictions / conditions
- Regulatory compliance with federal and state laws
- Intellectual property and trade secret protection
Responsive Representation for Franchise Disputes
Our firm helps enforce, defend, and mediate or arbitrate a range of franchise disputes using legal strategies tailored to the situation, needs, and available options of our clients.
We have extensive experience helping clients dispute, resolve, or defend against franchise matters involving:
- Breach of franchise agreements
- Breach of fiduciary duty
- Copyright, trademark and patent infringement
- IP ownership disputes
- Non-compete violations
- Enforcing nondisclosure agreements
- Theft of trade secrets
- Fraud and misrepresentation
Our franchise dispute lawyers can review your franchise disclosure document and franchise agreement to determine whether there has been a breach and review the dispute resolution provision. Most franchise disputes are resolved through arbitration. We can help you navigate the arbitration process and negotiate a favorable settlement.
To learn more about resolving franchise disputes, please read our blog, “Can I Sue My Franchise?”
What Information Is Included in a Franchise Disclosure Document?
A franchise disclosure document (FDD) is required by the Federal Trade Commission and is critical to performing pre-sale due diligence when buying a franchise. An FDD always consists of the same 23 items, including:
- The franchise agreement
- A description of the company and its history
- Biographical information on the franchisor’s officers or executive team
- Any past or current litigation or legal actions against the franchise
- Initial and other fees
- The support provided by the franchisor, such as training, advertising, computer applications, etc.
- The franchisee’s obligations for running their business
- The franchisee’s territory
- Trademarks and other proprietary information registered to the franchise
- Conditions for renewal, termination, or transfer
- Financial statements
- The process for dispute resolution, and more
Pay special attention to item 22 (the franchise agreement), as well as items 5, 6, 7, and 19. Items 5 and 6 cover initial and ongoing fees, item 7 details the initial investment required to establish a franchise, and item 19 includes information about the franchisor’s financial performance.
For a complete list of the items contained in an FDD, please visit the International Franchise Association website.
Reviewing a Franchise Disclosure Document
Ask an attorney to review your franchise disclosure document before signing. The FDD and legal agreements contained within were drafted by the franchisor’s attorneys to protect the franchisor. Your attorney will review the FDD with an eye on protecting your rights and to ensure that the franchisor’s responsibilities to you are fully and clearly expressed.
Common provisions that may need to be negotiated or clarified prior to signing include:
- Ambiguous language about the franchisor’s obligations to support the franchisee
- Territory rights, which can help protect your business from competition within the franchise
- First right of refusal on the option to establish another location in an adjoining territory
- Dispute resolution and forum selection clauses. If there is a dispute, the franchisor will often select an arbitration forum in the city of its headquarters, requiring the franchisee to incur travel expenses to dispute the matter. Instead, negotiate a forum convenient to you.
In addition to establishing the legal obligations for both the franchisor and franchisee, the franchise agreement should clearly outline your renewal rights, rights respecting transfer or sale, and termination rights. If any of these rights are ambiguous or missing, your attorney may advise you to clarify or add these provisions.
How to Terminate a Franchise Agreement
Your franchise agreement likely includes a termination clause that specifies the conditions and important timelines under which the franchisor can terminate the agreement in the event of a material breach.
The termination clause may also specify whether these breaches or curable or incurable. If they are curable, the franchisee has a right to correct the breach within a certain number of days before the agreement is terminated. Certain other breaches allow franchisors to terminate the agreement immediately without the opportunity to remedy the breach.
What if the franchisor breached the agreement? Most FDDs are heavily in favor of franchisor and do not contain a provision for the franchisee to terminate the agreement even if there is a breach. The franchisee must rely on the dispute resolution provision to settle disagreements.
Dispute resolution provisions usually call for mediation and then arbitration. Be aware that most of these provisions also include a forum selection clause. This allows the franchisor to select where arbitration will take place, usually in a location convenient to the franchisor, forcing the franchisee to travel to dispute the matter. That’s why it’s important to have an attorney review the franchise agreement before you sign.
If you wish to terminate your franchise agreement, speak to a franchise dispute attorney about your options. Your attorney will review the agreement to determine:
- Has the franchisor violated state or federal law?
- What is the dispute resolution process?
- Does the termination clause include rights for the franchisee?
- Can the franchise be sold or transferred to another party?
- Alternatively, is the best option is to let the term of your franchise agreement expire?
Once a franchise agreement has been terminated, all debts must be settled, and the franchisee must cease operations and use of all proprietary information immediately.
Our Houston franchise attorneys at Hendershot Cowart P.C. can review all relevant contracts and state franchise laws and help you understand your rights and franchise termination options.
Contact the Franchise Agreement Lawyers at Hendershot Cowart P.C.
At Hendershot Cowart P.C., you can rely on us for guidance, perspective, and resolution in and out of the courtroom. Our law firm, founded in 1987, has a reputation for providing only the highest-quality legal representation possible. We understand the stakes in each matter we handle, and we are well-known for our ability to handle extremely challenging legal situations.
If you have questions involving a franchise-related business matter or dispute, call (713) 909-7323 or contact us online to speak with an attorney.
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