Stephen A. Katz, P.C.
111 John Street, Suite 800
New York, NY 10038-3180
(212) 349-6407 (Fax)
SHOULD A FRANCHISEE LITIGATE?
Franchisors can harass their franchisees to the point where the franchisee
has grounds for suing. Katz will examine the facts of each case in light
of applicable regulations, statutes, contracts, and case law and determine
whether grounds for a franchisee’s lawsuit exist.
Examples of such grounds are
franchisor started selling its product in supermarkets, thereby cutting
into its franchisees’ sales.
Franchisees put up
money for advertising, out of which they believed the franchisor was
taking 2% for itself. But they discovered that it was pocketing 15% of
the communal-ad funds.
franchisor’s requiring franchisees to buy lubricants, equipment, and
services from it, instead of letting them purchase the products at
competitive prices on the open market, could violate the antitrust laws.
the franchisor marks of up its wholesale prices that its franchisees must pay, then sells the
franchised product to the public at lower prices than the franchisees
can charge, forcing them to sell at uncompetitive prices and eventually
letting the franchisor take over their franchises.
franchisor’s surrounding the franchisee’s store with company-owned
stores until it puts the franchisee out of business and takes over its
may be done to market profitable businesses that earn money for both
franchisee and franchisor. Or franchising may be done solely to sell
franchises, with the franchisor knowing full well that most of its
franchisees will fail but not caring because it only wants the initial
franchise fee that it receives when it sells a franchise. Franchising
of that second kind may be a criminal conspiracy, and the franchisor
may be liable to its franchisees under a state anti-racketeering
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