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Franchise Problems - Franchisor Taking Back Franchise

Discussion in 'Commercial Law Forum' started by James1955, 6 July 2014.

  1. James1955

    James1955 Member

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    Hi guys! I am at the end of 3 year term for my franchise.

    For various reasons, I have not paid my franchise fees, so I suggested he take back the franchise for sale in light of this.

    The next thing I know, he has it advertised with existing customers. This franchise did not come with customers. They took 3 years of hard work to build them up.

    Even if he could, the clients are not under any obligation to use the owner of the franchise.

    Does any of this make sense?
     
  2. John R

    John R Well-Known Member

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    Hi @James1955,
    If I understand your question correctly - You are handing back your franchise to the franchisor but don't believe that the customer database is an asset of the franchise? If this is correct, what does your franchise agreement say in relation to customers/leads, etc.?
     
    Tim W likes this.
  3. Rod

    Rod Well-Known Member

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    Ownership of the customer base is often spelt out in franchise agreements, though customers themselves cannot be 'owned' by anyone. What you might have to worry about is a non-compete clause in the franchise agreement.

    But must say I don't really understand you question. Were there any options to extend past 3 years and you didn't take them up?
     
    John R likes this.
  4. James1955

    James1955 Member

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    Thanks for your feed back guys... I am getting out of the franchise (Its real estate photography) as there is no adavantage being in it anymore, it was a 3 year period with the option of 3 years . I am handing it back for his resale as I have not being paying my monthly fees and i thought it would provide some compensation, besides the fact it eventually goes back through non payment of fee

    It was not an official document only a suggestion by email, yet he had it advertised on seek with existing customers before the end of my 3 years period, is this email enough for him to do this.


    I guess i need to read it more closely but how can he insist the clients,( realestate agents )must go with the franchise if i let it go.. these agents are under no obligation to use anyone and when I bought the franchise there were no clients.

    These guys go by the quality of photographs and would not use some one new to the industry until proven.

    Look forward to your thoughts and many thanks
     
  5. Rod

    Rod Well-Known Member

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    If you don't renew the agreement, the Franchisor may have the right to take back the Franchise business for nothing.

    You need to read your agreements. The documents usually spell out what should happen.
     
    John R likes this.

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