How can I quit a franchise agreement?
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How can I quit a franchise agreement?
I’m a franchise owner but my business has been going under for almost 2 years now. I can’t make any money from it and have been trying to sell it for the last year with no luck. I’ve informed my Franchiser about my situation but they haven’t been able to come to a conclusion and they would only retake the store from me if I can somehow get the rent down the landlord won;t budge on the rent. How can I quit my franchise? With their current model I don’t think anyone can make money at this location and I don’t see a way out other than maybe bankruptcy but I don’t know how that works and don’t want to get involved with that.
Asked on January 8, 2019 under Business Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
The franchise agreement is a contract; as with any contract, the difficulties you are having or your personal situation have no bearing on the contract. You can only get out of the agreement if one of the following applies:
1) There is some early termination clause or provison in the agreement.
2) The franchisor voluntarily agrees to let you out.
3) The franchisor violates some material or important term of the contract.
4) You can show that the franchisor lied about something material to get you to enter into the agreement (committed fraud).
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