Who sues whom, and over what
Franchisees commonly sue over misleading financial performance claims, disclosure problems, encroachment by new locations, or the franchisor's failure to provide promised support. Franchisors commonly sue over unpaid royalties and fees, continued use of trademarks after termination, and breaches of non-compete covenants, often naming the owner as a personal guarantor. New York's franchise law gives franchisees a claim for certain disclosure and registration violations and is considered among the more protective state laws, though whether it applies depends on the deal's connection to New York. The federal franchise rule governs disclosure but does not itself give franchisees a private right to sue. Which claims are available depends heavily on the state and the agreement.
The clauses that steer the case
Franchise agreements often contain forum selection clauses pointing to the franchisor's home state, arbitration provisions, jury and class action waivers, and shortened limitation periods. Some state laws limit how far those clauses can be enforced against local franchisees, and the outcome can depend on the specific language. Gather the franchise agreement, the franchise disclosure document you received and the date you received it, any financial projections or statements made by sales staff, and correspondence about support, territory, or defaults. Keep records of your location's financial performance. If you have received a notice of default, the cure period in the agreement may be short, so read it immediately.
Before a franchise lawsuit is filed
In a first consultation we review the agreement and disclosure document, the timeline, and what you want: to stay in the system on better terms, to exit, or to recover losses. For franchisees, we discuss whether to keep paying fees while the dispute proceeds, since stopping can create a default that strengthens the franchisor's position. For franchisors, we look at whether termination was properly noticed and whether post-termination covenants are likely to be enforced. Many franchise disputes resolve through negotiated transfers or exits once both sides understand the exposure. We help you decide whether a franchise lawsuit is the right step or a way to set up a better negotiation.
