Suing franchisees will Learn what the word Farce means

Ever wonder why there are so many unhappy lawyers? The best bit is at 7:37.

“Stringing a case out”.

  • Wondered why everyone says: “Better talk to a lawyer specializing in franchise law?
  • Because you do not know if you have a good case [law services are a credence good] you can easily be convinced that there is no hope or, taken on as a client until your cash flow ends and then discarded.

The Franchise Bar controls access to the Courts and routinely sabotages perfectly good cases. This is especially true in the smaller markets such as Canada, Australia and New Zealand. I have seen it dozens of times.

  • The law has been bought and paid for by Big Franchising but this is not such an unusual situation in public administration.

Franchisees who want to sue their franchisor will likely never see the inside of a Court. You should go to a civil court and find out how much of a joke it is. I love the law but dislike the practice of law very much.

  • There is no excuse for looking to the law for help: Franchisees and ex-Ees need to rely on themselves.

One Response to Suing franchisees will Learn what the word Farce means

  1. Carol Cross says:

    I must have missed this “Farce” blog written by Les Stewart.

    I would agree that suing your franchisor is a “farce” that is played out on the stage of federal regulatory policy and the law in the USA. The play itself is a Sham that provides a necessary appearance that franchisees have some rights in the courts under current law in spite of the binding and non-negotiable and malicious agreements that they signed in naivety and ignorance, and great good faith. The play also provides dollars for the ABA who generally supports the sham because it is good for everybody’s bottom lines—the franchisors, the banks and lenders, the Landlords, the developers, and the ABA.

    The reality is that franchising was regulated by the FTC to begin with to protect franchisors and ONLY those franchisees who would stand in the franchisor’s systems from those franchisees who would fail to thrive and would try to sue their franchisor for fraudulent inducement/concealment.

    The FTC knew there would be lawsuits because, of course, the franchisors, under the FTC Rule, would not be disclosing unit performance statistics to new buyers of their franchises. It follows that those who were NOT informed of the true risk, as known to their franchisor, when they invested hundreds of thousands in a franchise would feel cheated and defrauded when their franchised business failed.

    However, under contract law, those sellers who are guilty of fraudulent concealment in the sale are responsible to return the buyers to their original state when the fraud is revealed and the contract is rescinded. Franchisors could not stand in our economy if franchisees won lawsuits for fraudulent inducement/concealment and were returned to WHOLE and this is why in the almost 30 years since franchising was regulated, very few, if any, franchisors have been found guilty of fraudulent inducement/concealment in the sale of their franchises to the public.

    Trying to find a breach in a franchise agreement is like looking for gold in Brooklyn but if the franchisees pay for the “looking for gold” this is the name of the game. The franchisees get “fools gold” but the attorneys on both sides do okay.

    This is demonstrated in the recent decision in 2009 by a Federal District Court in Denver wherein the Peaberry Coffee Franchisors were given a summary judgement in their favor, even though the Judge found, as reported by Janet Sparks of Franchise Times, that the franchisor concealed material facts from the franchisees in the pre-sale and sale process AND that the franchisees would not have purchased the franchises if they had been aware of the performance statistics, etc.. in the franchisor’s possession.

    But, the Peaberry franchisees appeal to the District Courts of Appeal ia a GOOD thing, as well as The UPS Store, BSAs appeal out of Summary Judgment is a GOOD thing.

    Maybe there will finally be some good law that straightens franchising out for good for the so called “public good.”


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