Franchise Group Assists Franchisor in Implementing New Program, Defeating Challenge from Reluctant Franchisees


One of our franchisor clients wanted to implement a new program in its system. While the program was not provided for in the existing franchise agreements, the franchisor wanted all franchisees to participate in, and pay all fees associated with, the program. We assisted the client in structuring the program so as to fall within the provisions of the existing franchise agreements. When the fees associated with the program were nevertheless challenged by nearly two dozen franchisees, our transaction and litigation groups worked together to develop a strategy that ultimately led to the dismissal of the claims of more than half the franchisees, and settlement with the remaining franchisees without any change in the program or program fees. The program is now an integral part of the franchise system, and most of the franchisees who brought the action have become more involved in their business, and supporters of the franchise system.