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What Constitutes a “Wrongful” Termination of a Franchise Agreement?

April 26, 2017Agreement constitutes franchise termination wrongful

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What Constitutes a “Wrongful” Termination of a Franchise Agreement?

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A wrongful termination occurs when a franchisor cancels a franchise based upon a wrongful “pretext.” For example, if a franchisee invests valuable time and resources in building a franchise and establishes a successful local market for the brand, and the franchisor thereafter decides that it would be far more lucrative to own and operate its own franchise or enter into a new franchise agreement with a third party and fabricates a reason or a pretext in bad faith to cancel the franchise, this would constitute a wrongful termination. Read more What do you think? Post a comment here!