Houston Franchise Dispute Lawyers

Houston Franchise Dispute? Whether You Want Out or Need to Enforce Your Rights, We Can Help.

The numbers in the FDD didn't match what you're actually living. The franchisor is threatening termination over a technicality. Or a franchisee is violating your agreement and damaging your brand. Whatever the situation, franchise disputes move fast – and the contractual stakes are significant on both sides.

Hendershot Cowart P.C. represents Houston franchisees and franchisors in disputes involving wrongful termination, royalty and fee conflicts, non-compete obligations, and FDD misrepresentations. We understand the franchise relationship from both sides and know how these disputes typically play out – through negotiation, arbitration, and litigation.

Don't face a franchise dispute without experienced counsel. Contact Hendershot Cowart P.C. today – call (713) 783-3110 or contact us online to schedule your confidential consultation.

On This Page

• Common Franchise Disputes We Handle
• Legal Grounds for Terminating a Franchise Agreement
• Potential Consequences of Breaking a Franchise Agreement
• Negotiated Exit Strategies
• Franchise Arbitration, Mediation & Dispute Resolution
• Non-Compete and Post-Termination Restrictions
• Selling or Transferring a Franchise: Attorney Guidance
• Frequently Asked Questions

Franchise Breach of Contract

Franchise agreements are complex legal documents that define the rights and obligations of both parties. When either party fails to fulfill their contractual obligations, it can lead to significant business disruptions.

Our team has extensive experience representing clients in breach of contract disputes involving:

• Failure to deliver on promised training, support, or marketing
• Issues with marketing tools, intellectual property, or software systems
• Encroachments into your franchise territory or competing distribution channels 
• Product supply or quality control issues
• Misrepresentation as to the cost and associated expenses of operations and startup

Franchise Misrepresentation & FDD Disclosure Violations

The Franchise Disclosure Document (FDD) is designed to provide prospective franchisees with the information needed to make an informed investment decision. Misrepresentations or omissions in this document can form the basis for legal action. 

Our franchise fraud attorneys help franchisees who have been misled by:

• Inaccurate financial performance representations
• Undisclosed litigation history
• Hidden costs and fees not properly disclosed
• Misrepresented territorial rights or protections
• False statements about franchisee success rates
• Misrepresented systems performance and quality of goods and services

Improper Implementation of System-Wide Changes

Most franchise agreements contain provisions that expressly allow the franchisor to make system-wide changes, including updating operations manuals, technology systems, and brand standards. These provisions typically grant the franchisor broad discretion to modify the system.

But when a system change is unreasonably expensive, technically infeasible, or disproportionately burdensome to the franchisee, there may be grounds to challenge it. 

Territorial Encroachment

When a franchisor appears to encroach on a franchisee's territory, the first step is to review the franchise agreement with an attorney who will look for specific language regarding: 

• Whether you have exclusive territorial rights
• The precise geographic boundaries of your territory
• Any exceptions or carve-outs for the franchisor
• Any provisions about system expansion or development

Right of First Refusal for Adjacent Territories Not Honored

A right of first refusal (ROFR) for adjacent territories is often included in the franchise agreement to protect existing franchisees and incentivize their growth. If the franchisor fails to honor this provision, the franchisee could lose valuable expansion opportunities and market share. 

Our attorneys can review the relevant provisions and help the franchisee enforce their contractual rights.

Franchise Nonrenewal & Renewal Disputes

When a franchisor doesn't renew a franchise agreement, the franchisee's options to preserve the business depend on the terms of the agreement and the circumstances of the non-renewal. 

If the non-renewal violates any terms of the franchise agreement (such as specific renewal conditions, notice requirements, or franchisor obligations), our attorneys can work with the franchisee on a legal strategy to protect their contractual interests. Even if the agreement is silent on the topic or allows for non-renewal, negotiation is still a viable option.

Wrongful Franchise Termination & Termination Defense

We defend franchisees facing wrongful termination and work to secure proper remedies. This includes challenging any deviations from contractual procedures, such as ensuring you received proper notice of alleged breaches and were given the chance to fix issues before termination occurred.

You may have grounds to exit your franchise agreement if:

• The franchisor has committed a material breach of the franchise agreement
• Fraudulent misrepresentations were made in the Franchise Disclosure Document (FDD)

Our attorneys carefully analyze both your franchise agreement and the FDD to identify discrepancies between what was promised and what was delivered. We'll help document these breaches to build your strongest case for termination.

How to document breaches or misrepresentations by the franchisor:

Building a strong case for termination requires thorough documentation:

• Document your communications with the franchisor, pointing out breaches or violations of the FDD and asking them to cure. These don’t have to be written letters; emails, recorded video, or teleconference meetings can serve as evidence, too.  
• Keep records and receipts of actual costs compared to FDD representations
• Compile records of support requests that went unfulfilled
• Keep accurate and up-to-date financial records showing the impact of franchisor failures

We'll help you gather and organize this crucial evidence to support your termination claim.

Is the non-compete provision enforceable if the franchisor breached the agreement first?

Whether a franchisee remains bound by a non-compete provision after the franchisor breaches the agreement depends largely on the specific language in your non-compete clause. 

If your non-compete states it applies "after termination for any reason," this creates a significant hurdle to being released from the restriction. That said, even with this language, our attorneys have successfully freed franchisees from non-compete obligations after franchisor breaches. 

Considering breaking a franchise agreement? Understand the consequences first. A franchise dispute attorney can help you weigh the risks of walking away, including:

• Liquidated damages provisions may require payment of estimated future royalties
• Personal guarantees could put your personal assets at risk, not just business assets, even if you have an LLC in place. 
• Ongoing lease obligations for your commercial space may continue even after termination
• Non-compete restrictions could limit your ability to earn a living in your field or utilize existing assets, such as warehouse space and customer relationships, for your next business venture

Our team will review your specific agreement to assess your financial exposure and develop strategies to minimize these consequences while fighting for your interests.

Sometimes the best solution to a franchise dispute is a negotiated exit that works for both parties. In our experience, the success of mutual termination negotiations often depends on your specific circumstances, including:

• How long you've been operating the franchise
• Your location relative to the franchisor's core markets
• The financial health of your franchise 
• Your documented communications regarding breaches or misrepresentations

Our law firm has extensive experience negotiating favorable termination agreements – leveraging legal claims against the franchisor and applicable laws to minimize financial penalties and non-compete restrictions.

Most franchise agreements contain specific dispute resolution provisions:

• Mandatory arbitration clauses often prevent traditional lawsuits
• Forum selection clauses may require proceedings in the franchisor's home state
• Franchise mediation may be required before arbitration can commence

Our attorneys are experienced in all forms of franchise dispute resolution, including arbitration and mediation, and can guide you through these processes efficiently while fiercely protecting your interests.

Franchise agreements typically contain restrictions on a franchisee's ability to compete after the relationship ends. These provisions must be reasonable in scope, duration, and geographic area to be enforceable. 

We help clients:

• Assess the enforceability of non-compete clauses
• Defend against overreaching restrictions
• Navigate post-termination obligations
• Protect business interests when transitioning out of a franchise
• Challenge non-compete provisions when the franchisor has breached the agreement

Unlike selling an independent business, when you sell a franchise, you're bound by the franchise agreement, and most agreements contain specific provisions regarding a franchisee's right to sell their franchise to exit the agreement. 

Here are the key elements typically found in these provisions:

• Written approval from the franchisor is typically required and may be withheld without cause unless your attorney negotiated language that says consent will not be unreasonably withheld before you signed the agreement. 
• You generally cannot be in breach of the agreement at the time of transfer. When reviewing franchise agreements on the front end, our attorneys often negotiate language stating that the franchisee must be given notice and an opportunity to cure any breaches before rejecting the transfer request. 
• Transfer fees can be substantial
• The franchisor may have the first right of refusal, which often gives the franchisor the option to purchase the franchise at the same price and terms they've negotiated with a potential buyer.

Our franchise transfer attorneys can facilitate the sale or transfer process by reviewing the agreement, handling all correspondence with the franchisor to ensure proper notice is given and deadlines are met, and helping structure and negotiate the sale or transfer terms – whether the buyer is the franchisor or a third party.

Having experienced counsel on your side can help ensure that all legal requirements are met to avoid potential grounds for the franchisor to block the transfer and to significantly streamline what can otherwise be a complicated process.

Take the First Step Toward Resolution with a Franchise Dispute Lawyer Serving Houston and Texas

Hendershot Cowart P.C. is a Houston-based business litigation firm representing franchisees and franchisors throughout Texas – including Dallas, San Antonio, Austin, and beyond. Our Texas franchise lawyers understand both the legal landscape and the local business environment that shapes franchise disputes in this state.

Don't continue struggling with a franchise relationship that isn't working. Contact our Houston-based franchise litigation attorneys today for a confidential consultation to discuss your options and develop a strategic plan forward.

Call (713) 783-3110 or complete our online contact form to schedule your consultation.

My franchise isn't profitable and I want to close. Can I just walk away?

Not without reviewing your franchise agreement first. Walking away without following the proper process can expose you to serious financial consequences – including liquidated damages, personal liability under any personal guarantees you signed, and ongoing lease obligations for your commercial space.

Before making any decisions, you need to understand exactly what your agreement requires of you, and whether you have any legal grounds to exit on your terms. Most franchise agreements contain specific termination procedures, notice requirements, and post-termination restrictions that apply regardless of your reason for closing. 

If the franchisor has failed to deliver on their obligations – through inadequate support, misrepresented costs, or failure to perform under the agreement – you may have grounds to negotiate a mutual exit that limits your exposure.

The key question is not just whether you can terminate, but at what cost and under what conditions. An attorney experienced in franchise disputes can review your agreement, assess your situation, and help you develop a strategy that minimizes financial risk before you take any action.

My franchisor is pressuring me to sell my franchise, but my agreement still has years left. Do I have to?

A franchisor cannot unilaterally force you to sell your franchise before your agreement term expires unless you are in breach of the franchise agreement. Your rights and duties as a franchisee are defined by your franchise agreement, and if the franchisor is pressuring you to exit early without valid legal grounds, that pressure may itself constitute a dispute worth taking seriously.

The first step is to understand what your agreement says. Key questions include whether the franchisor has alleged any default or breach on your part, whether you have received proper notice and an opportunity to cure any alleged issues, and whether their demands comply with the termination and transfer provisions in your agreement. 

If the franchisor is attempting to force a sale without following contractual procedures – or without a legitimate legal basis – you may have grounds to push back, negotiate, or pursue other remedies.

You should also be careful not to take any action, sign anything, or respond to the franchisor's demands without counsel. Statements you make during this process can affect your legal position. Contact a franchise dispute attorney as soon as possible to review your agreement and protect your remaining term.

I signed a franchise agreement but now I can't get financing to open. Can I get my franchise fee back?

This is one of the most frustrating positions a franchisee can find themselves in – you've signed the agreement, paid the fee, and now the path forward is blocked through no fault of your own. Whether you can recover your franchise fee depends on the specific terms of your agreement, but it is not a foregone conclusion that the money is gone.

A few things to examine immediately:

• What does your franchise agreement say about termination before opening? Some agreements include provisions addressing pre-opening defaults or failure to meet development timelines, and those provisions may – or may not – address fee refundability.
• Were any representations made during the sales process about financing support, typical startup costs, or lender relationships? If the franchisor's representations in the FDD or during the sales process materially overstated how accessible financing would be, there may be grounds for a misrepresentation claim.
• Has the franchisor communicated with you about your situation? How you respond – and what you put in writing – matters. Do not agree to any extension, modification, or release without first consulting an attorney.

The sooner you get counsel involved, the more options you are likely to have. Delay can narrow your window to assert certain claims or negotiate your way out on favorable terms.

My franchisor suspended our location and is claiming we owe fees we don't think are legitimate. What can we do?

A franchisor's ability to suspend or terminate your franchise is not unlimited. Even when an agreement gives the franchisor broad authority to act on non-payment, that authority is still constrained by the contract itself – including notice requirements, cure periods, and the accuracy of the underlying fee calculation.

Before accepting the suspension as final or making any payments under protest, you should:

• Review the fee demand carefully. Were the fees properly calculated and disclosed under the terms of your agreement? Are there offsets, credits, or disputed items the franchisor has not accounted for?
• Verify the franchisor followed proper procedures. Most franchise agreements require written notice of default and a defined period to cure before termination or suspension can take effect. If those steps were skipped, the suspension may be improper.
• Check your dispute resolution obligations. Many franchise agreements require mediation or a formal notice-and-negotiation period before either party can escalate to arbitration or litigation. Skipping those steps – or letting the franchisor skip them – can affect your legal position and your options going forward. 
• Assess the financial damage. If your location has been suspended and revenue has stopped, those losses may be recoverable – particularly if the suspension was wrongful or retaliatory.

Franchise fee disputes can escalate quickly, and franchisors often have legal teams that move fast. Having an experienced franchise attorney review your agreement and dispute the suspension on your behalf can level the playing field and open the door to negotiation.

I invested over $500,000 based on the FDD, and the financial picture it painted was simply not accurate. Do I have any recourse?

Yes – and this is one of the most significant categories of franchise disputes. The Franchise Disclosure Document is a legal document, and material inaccuracies or omissions in it can form the basis for claims against the franchisor.

Common FDD misrepresentations we see include:

• Inaccurate financial performance representations – projected revenues or profits that don't reflect what franchisees actually earn, or that exclude costs that should have been disclosed
• Undisclosed or underrepresented costs – startup expenses, required purchases, or ongoing fees that were minimized or omitted
• Misrepresented territorial rights or protections – promised exclusive territories that the franchisor later encroached on, carved out, or never actually intended to honor

Whether you have a viable claim depends on what was represented, what you relied on in making your investment decision, and how the discrepancy can be documented. Recoverable damages can be substantial when the misrepresentation directly caused your financial loss.

The first step is a careful, side-by-side review of what the FDD represented and what you have actually experienced. Our attorneys can help you evaluate the strength of your claim and determine the best path forward.

Don't Face a Franchise Dispute Alone

Franchise disputes demand swift action and experienced counsel. The longer you wait, the more your options narrow – and the greater your financial exposure becomes.

Whether you're a franchisee seeking an exit strategy or a franchisor defending your brand and interests, Hendershot Cowart P.C. has the experience to navigate franchise disputes in negotiation, mediation, arbitration, and litigation.

Contact our Houston franchise litigation team today for a confidential consultation. Call (713) 783-3110 or contact us online to discuss your situation and develop a strategic path forward.