Pitfalls of a Fast Food Franchisee
We recently acted for the franchisee of a well-known fast-food chain.
Like many franchise agreements, the opportunity to run a business that has the backing and support of an established brand is very enticing.
Not only are you at the helm of a business that already has brand awareness, a loyal following and a recognisable product, but the support and guidance make this business model very appealing.
However, like anything in business, there can be pitfalls, and when it comes to a franchise, the risk is heavily weighted towards the franchisee, so if something goes wrong, the brand is protected.
But what happens if something goes wrong with the franchisor?
You may have seen the recent Papa Johns UK announcement regarding the closure of “underperforming” stores in England.
This is exactly what happened to one of our clients who had multiple branches of a recognised fast food brand located throughout South Wales.
A number of factors, including the cost of living crisis and decisions made at an international level by the franchisor, resulted in the closure of our client’s franchise stores. Our client had provided a personal guarantee for sums owed to the franchisor and this made the situation more than just a business failure.
However, thanks to the knowledge, skill and expertise of our legal team, we were able to extract him from the franchise contract enabling him to leave the franchise agreement without penalty or the enforcement of the personal guarantee.
Summary.
While situations such as this are few and far between, it certainly pays to seek expert legal advice as early as possible in negotiations, especially if there is the potential for personal guarantees to be called in.
If you find yourself in a similar situation or need advice on any aspect of contract disputes, please contact our team on:
01792 450010