Have you seen this clause in your franchise agreement? I bet you have. It goes by several names, but usually it is headed as “Entire Agreement” or “Merger Clause”. Unfortunately, franchisees often underestimates the power of this clause in their contract:
Entire Agreement: This Agreement and the Attachments hereto constitute the entire agreement between Franchisor, Franchisee and Franchisee’s Principals concerning the subject matter hereof. All prior agreements, discussions, representations, warranties and covenants are merged herein. THERE ARE NO WARRANTIES, REPRESENTATIONS, COVENANTS OR AGREEMENTS, EXPRESS OR IMPLIED, BETWEEN THE PARTIES EXCEPT THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. Except those permitted to be made unilaterally by Franchisor, any amendments or modifications of this Agreement shall be in writing and executed by Franchisor and Franchisee.
I know the franchisee sales reps are funny, confident, smart and seem trustworthy, but they earn a commission for selling you a franchise. Unless a claim they made is specifically written in the franchise agreement, they probably won’t deliver on it. If you ask the sales rep to include a claim or promise they made in writing and they refuse (and say, “Legally we can’t put it in writing, but don’t worry…we’ve been around a long time and you can trust that we’d never do anything to hurt our franchisees”), you can bet your goat they won’t make good on it.
Courts almost always enforce the above Entire Agreement clause even if the franchisor made different claims before the contract was signed. Most of the rules governing franchises are state specific (except the FTC rules), so speak to a franchise lawyer in your state and get informed! Call your local or state bar association and ask for a list of attorneys practicing franchise law.
I’ll write a post on how to select a good franchise lawyer soon.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
I don’t see how that is fair or legal. If a saleman says the company will do something, and they don’t, isn’t that some kind of actionable false advertising?
To Anonymous:
I feel your pain but just because something seems unfair doesn’t mean it is illegal or a court should provide you with a remedy. If the francisee had a lawyer, and he didn’t adequately warn you or look out for your interests, SUE YOUR LAWYER! That is probably your best route and is much easier than you might think (it happends more often than you would think). I guess the important thing is to get documentation and everything you do, even go so far as to record conversation and presentations with the Franchisor company. Then you’d have a solid case of false advertising which is a seperate claim from a breach of contract.
What does this mean?
Except those permitted to be made unilaterally by Franchisor, any amendments or modifications of this Agreement shall be in writing and executed by Franchisor and Franchisee.
It means thats whatever oral arrangements you and the franchisor have made, if the franchisor decides to break the oral agreement there is no breach of the franchise agreement. Basically, you cannot sue the franchisor for breach of agreement.
Can someone let me have a copy of a franchise agreement and fee schedules of either, or all, of the following;
Hilton
Holiday Inn Resorts
My email address for said franchise agreements is gmseasia@gmail.com thanks
Ian wrote on March 17, 2008 @ 9:24 pm:
You’ll have a hard time finding those Franchise Agreement, Ian, because they are exempt from state registration due to the size and sophistication of the investment.