A franchisee is a person or company that is granted a license to do business under the franchisor’s trademark, trade name, and business model, by the franchisor. The franchisee purchases a franchise from the franchisor. The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases, the franchisee must pay an ongoing franchise royalty fee to the franchisor.

Franchising is a system for expanding a business and distributing goods and services to meet higher consumer demand. It’s based on a relationship between the brand owner and the local operator to skillfully and successfully extend one’s established business system. As a condition of obtaining or commencing operation of the franchise, the franchisee makes a required payment or commits to make a required payment to the franchisor or its affiliate.

Role of the Franchisee

A franchisee has four major responsibilities for the success of the system in which they are granted a franchise:

  • To protect the franchised brand by operating the franchise in strict compliance with system operating standards.
  • To build a strong and loyal customer base by offering only approved products and services and by providing superior customer service.
  • To ensure that all employees are properly trained and the franchise is properly staffed at all times.
  • To advertise and promote the franchise and its approved products and services according to the guidelines provided by the franchisor.

If you’re a franchisor, and your franchisee is refusing to comply with their obligations, you may be able to issue a “breach notice”. Whether you can depends on your particular circumstances and arrangement with the franchisee. However in order to do this in a legally correct manner, or to solve further queries that you might have about this, connect to us through Easy Drafting at Noida, Greater Noida and Noida Extension  from our top lawyers.

 What Should Be In a Breach Notice?

The Code explicitly specifies the sort of information that you must include in a breach notice. It involves setting out in writing what they’re doing wrong, why it is wrong, and how you want the franchisee to address the issue

.To comply with the statutory requirements under the Code, the notice must:

  • Be in writing;
  • Tell the franchisee that you are proposing to end the franchise agreement because of the breach;
  • State what you want the franchisee to do to fix the breach; and
  • Give the franchisee a reasonable deadline to rectify the breach.

The maximum period that you have to provide the franchisee to remedy the breach does not need to be more than 30 days (keeping in mind that shorter periods must still be “reasonable”). You should also clearly state what terms of the franchise relationship the franchisee is breaching, and how they are violating these obligations.

Hence, it is very important for you to communicate clearly with the franchisor if something goes wrong. Sometimes the franchisor can end the agreement without notice. Under the Franchising Code of Conduct, a franchisor does not have to provide notice and can end the agreement early if the franchisee:

  • no longer holds a franchise license;
  • becomes bankrupt or insolvent;
  • abandons the franchised business or the franchise relationship;
  • operates their business in a way which endangers public health or safety;
  • is found to be fraudulent in connection with the operation of the franchised business; or
  • agrees to end the franchise agreement.

Our specialist lawyers can review your franchise agreement and provide you advice on whether the franchisee is breaching their obligations, and whether you have the right to issue a breach notice. We can also prepare the breach notice for you so that you can be sure that your notice complies with your legal obligations under the Code.

As Easy Drafting act as the client’s legal concierge providing technology solutions for lawyer discovery, price discovery and case updates. With the use of technological solutions, we match the client’s requirements with the lawyer based on expertise, location etc.

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