After parties have gotten into franchise agreements, it indicates there is commitment from a franchisee to run the business for the agreed period. This period may present many challenges to the franchisee because while the expectation was that the business would be profitable, this might not be the case. This is in addition to other challenges. In consideration of franchise termination Illinois business owners should know available options.
There are some questions that franchisees should ask before signing agreements. To begin with, they must know if they are able to effectively run the business for the stated period. Further to that, they need to have a strategy they can use if things are not progressing as planned and they need to opt out. There are many risks that are experienced for any business and thus knowing the possibility of terminating an agreement will be important.
If you have a change of mind early on, there is a code of conduct which has provision for a cooling off period. The agreement can be terminated within 7 days. This should either be after entering the agreement or making payment. The cooling off period is standard and will only apply to new agreements and not when the franchiser is transferring or renewing. The refund is given less any reasonable expenses that might have been incurred.
Other than the cooling off period that is enforceable for all franchises, there are many agreements that do not allow the franchisee to end the agreement early, that is, before end of the term. Therefore, it is important to receive legal advice and go through the agreements before they are signed. Although rare, there are agreements that provide franchisees with the option to terminate. Potential franchisees need to consider negotiating with franchisers in case the original agreement does not have that clause.
Another option of negotiation that is available is inserting an exit clause to cater for occurrence of some events. For example, in case premises relocate, or when the expected finances are not approved, you should be able to terminate the agreement. This will come in handy for occurrences that are beyond your control.
In the event that there is no termination option, you will be forced to operate the franchise until the term comes to an end. Nevertheless, it is possible to terminate if it is the franchiser that breeches the agreement. This will however require that you follow dispute resolution procedures laid down by the code of conduct of franchising.
You can also use dispute resolution procedures for requesting for a termination. This can however only be done if there is cause of action against the franchiser to prove they did breech the agreement. However, there is no guarantee that you will achieve termination. It all depends on how strong the case is.
There is the option of mutual agreement. This involves negotiating with the franchiser to have the termination effected. This option involves that you do research to find out what previous franchisers might have done to make it effective.
There are some questions that franchisees should ask before signing agreements. To begin with, they must know if they are able to effectively run the business for the stated period. Further to that, they need to have a strategy they can use if things are not progressing as planned and they need to opt out. There are many risks that are experienced for any business and thus knowing the possibility of terminating an agreement will be important.
If you have a change of mind early on, there is a code of conduct which has provision for a cooling off period. The agreement can be terminated within 7 days. This should either be after entering the agreement or making payment. The cooling off period is standard and will only apply to new agreements and not when the franchiser is transferring or renewing. The refund is given less any reasonable expenses that might have been incurred.
Other than the cooling off period that is enforceable for all franchises, there are many agreements that do not allow the franchisee to end the agreement early, that is, before end of the term. Therefore, it is important to receive legal advice and go through the agreements before they are signed. Although rare, there are agreements that provide franchisees with the option to terminate. Potential franchisees need to consider negotiating with franchisers in case the original agreement does not have that clause.
Another option of negotiation that is available is inserting an exit clause to cater for occurrence of some events. For example, in case premises relocate, or when the expected finances are not approved, you should be able to terminate the agreement. This will come in handy for occurrences that are beyond your control.
In the event that there is no termination option, you will be forced to operate the franchise until the term comes to an end. Nevertheless, it is possible to terminate if it is the franchiser that breeches the agreement. This will however require that you follow dispute resolution procedures laid down by the code of conduct of franchising.
You can also use dispute resolution procedures for requesting for a termination. This can however only be done if there is cause of action against the franchiser to prove they did breech the agreement. However, there is no guarantee that you will achieve termination. It all depends on how strong the case is.
There is the option of mutual agreement. This involves negotiating with the franchiser to have the termination effected. This option involves that you do research to find out what previous franchisers might have done to make it effective.
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Learn more about the franchise termination Illinois process and get more info about a reputable franchise and dealership litigation firm at http://www.cdcaruso.com/franchise-distribution/terminations today.
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