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.