Leveling the Playing Field in Franchising

Posted on August 23, 2006 by Stark & Stark
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Adam J. Siegelheim, a member of the Franchise Law group, authored Franchise Fairness for the July 31edition of the New Jersey Law Journal, Corporate Law Supplement.  The article discusses the New Jersey Franchise Practices Act, which was designed to address the disparity in bargaining power between franchisors and franchisees.

You can read the article here.

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Jennifer - June 5, 2007 10:17 PM

I am in the process of trying to sell my franchise of 4 years. I am now faced with the fact that not only has it changed so much in 4 years that the new contracts barely resemble my contract, but in trying to sell, the franchisor is representing that you have no right to transfer any territory rights. Basically all you are selling is your equipment. Is this correct??

Adam Siegelheim - June 6, 2007 4:13 PM

Hi Jennifer,

If your franchise is located in New Jersey, the Franchise Practices Act governs the transfer of franchises (no matter what the franchise agreement says). If your franchise is located outside NJ, then it will be dependent upon which state you are in. In general, the franchisor cannot be unreasonable in approving the transfer.

With respect to the second point you raised, there is not much you can do about the fact that your purchaser will have to sign a franchise agreement that is substantially different than the one you signed.

Please feel free to e-mail or call me, if you would like to discuss this further.

Regards,

Adam Siegelheim

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