How Does Franchise Litigation Work?

Disputes are not uncommon between franchisees and franchisors. While some of these disagreements may be settled through negotiations, others may require litigation to reach a fair outcome and hold either party accountable for wrongs committed. This process is complicated and may be lengthy, so it’s important to hire our “how does franchise litigation work attorneys” from Luther Lanard, PC to guide you through the process and advocate for you. 

An Overview of Franchise Litigation

The franchisor-franchisee relationship comes with many legal parameters that govern how the business is supposed to function, what each party’s responsibilities are, and how disputes are to be resolved. While negotiations may be attempted initially, using litigation or arbitration to resolve a lawsuit may be required. 

When you hire franchise attorneys in Orlando, FL, they will answer your questions about how franchise litigation works and prepare you for what to expect as they help you throughout the process. Franchise litigation involves several distinct phases that provide both sides with the opportunity to gather and share information and evidence and receive court validation and direction in order to receive a decision from the court to resolve the conflict. 

What Are Common Types of Litigated Franchise Disputes?

There are several types of disputes that may be litigated during your time as a franchisee. These disputes may be between you and the franchisor, another franchisee, or a landlord. Litigation can be lengthy and costly, and it is wise to hire an experienced lawyer who can streamline the process as much as possible through their experience and knowledge of the law. While not an exhaustive list, below is a closer look at some of the disputes that are commonly litigated in franchises. 

Breach of Contract Disputes

A breach of contract dispute is one of the most commonly litigated areas in franchises. Both parties agree to uphold the terms and responsibilities laid out in the agreement, as well as act in good faith. Franchisees are subject to greater restrictions than franchisors, but both parties can be held accountable if either party breaches the agreement in any way. A lawyer can provide direction on legal options at this juncture and develop a strong litigation strategy regardless of the contract issue being disputed.

Lease Disputes

Franchisees need physical space to operate, and this requires leasing commercial property. When lease disputes arise between franchisees and landlords, these issues can escalate and require litigation to settle. These disputes can range in cause from rent disputes to misrepresentation, to landlord violations, and more. When your place of business is threatened, a lawyer can help determine the root of the issue and the value of losses suffered so a resolution and settlement can be reached. 

Encroachment disputes

Disputes regarding franchise encroachment may arise when franchisors open a new franchise in your designated area. Encroachment can also occur when other franchisees infringe on your territory by opening their franchise. There are generally stipulations and protections built into the franchise agreement, so violations of this nature can be grounds for litigation. Because franchise growth often involves the purchase of commercial property, the sooner you hire a lawyer and initiate a lawsuit, the better. 

Termination and Non-Renewal Disputes

There may be times when franchisees receive a notice of termination or non-renewal from the franchisor. This may occur when the franchisor believes there is an issue with the execution of the agreement. Your lawyer will thoroughly investigate their claim to understand the reason behind this action and whether or not it is accurate and within the scope of the agreement. They can also help you determine your options and course of action in the event that you wish to leave the franchise instead.

Fraud or Misrepresentation Disputes

Franchisors are obligated to be transparent with prospective and existing franchisees per the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). When a franchisor engages in misrepresentation or fraud, they can be held accountable. As a franchisee, you have the right to file a lawsuit and provide evidence of the franchisor’s wrongdoing and the financial losses you suffered as a result. A lawyer will help ensure you have sufficient evidence to support your case and meet litigation requirements. 

What are the Phases of Franchise Litigation?

Once franchise dispute allegations are filed with the court, litigation is initiated. Franchise litigation can be broken down into four key stages. Each one serves a distinct purpose and determines whether the litigation process proceeds or is halted. The early stages are primarily for information gathering, while the later ones are for making your case and rebutting the opposition’s arguments. Below is a more in-depth look at each phase of the process and what to expect. 

Discovery Phase

During the first stage of litigation, both parties will engage in discovery, where each will gather and share information regarding the case. This usually includes evidence, documentation, statements, and more. The purpose is to learn more about the allegations and get a clear picture of the scope of the dispute. It also allows both sides to review the evidence submitted and determine the strengths and weaknesses of the case. It also allows each side to formulate its strategies and arguments for litigation. 

Deposition Phase

The deposition phase allows an opportunity to dive deeper into learning more about the allegations, gather additional documentation, and determine how the opposition will present their side in court. It allows each side to take what they learned during discovery and ask targeted questions. Franchisees and franchisors, as well as other relevant parties, may be deposed during this stage. Depositions are usually conducted under oath and admitted into discovery during this early stage of litigation. 

Summary Judgment Phase

After reviewing discovery, one party may file a motion for summary judgment in accordance with Florida Rule 1.510. This motion is often used when there is strong evidence on one side and a party seeks the court to make a decision in the matter instead of proceeding to trial. They may request the case to be dismissed due to a lack of a real dispute based on the evidence. The motion will also specify the particular aspects of the case they are seeking a decision on, and must address additional concerns if needed. 

Trial or Arbitration Phase

If the case proceeds, it will either go to trial or be handled via arbitration. Both sides will have an opportunity to present their case via arguments and evidence. A judge or arbitrator will hear the case presented and make a decision at the end to resolve the case. Depending on the outcome of the case, you may be able to appeal the court’s decision. It is important to be aware, though, that arbitration decisions may not necessarily be appealed.

Is There a Statute of Limitations for Franchise Litigation Lawsuits?

Franchise lawsuits are subject to statutes of limitations like any other case. This means that those who wish to file a lawsuit must do so within a limited amount of time in order to recover the losses they suffered because of another party. If a franchisee fails to initiate a claim within the time limit, they legally forfeit their right to take any additional action and will lose their ability to recover. 

The statute of limitations for franchise litigation will depend on the type of claim that is being filed. As such, different types of disputes may be subject to different timelines. According to Florida Statute 95.11, the following cases must be filed within the designated time limits:

• Five Years: Breach of contract
• Four Years: Fraud, injury to person or property, and rescinding a contract
• Two Years: Negligence claims

To make sure that you have enough time to resolve your case, it is essential to file your lawsuit as quickly as possible if an event occurs that causes a dispute. Your Orlando franchise lawyer will act quickly to determine your options and optimize your case for maximal results. The sooner you hire representation, the better the outcome of your case. 

How Long Does Franchise Litigation Take?

Franchise litigation can take months or years to resolve. The timeline will depend on the type of dispute and its complexity. The discovery phase alone is often a lengthy process, due to the amount of evidence and information that must be gathered to determine if a case is viable and support or refute a claim. The method for resolving the case can also contribute to how long franchise litigation may take. For example, alternative dispute resolution methods may be used and typically take less time than a trial.   

It is important to discuss your case with your franchise attorney in Orlando, FL to determine what factors may affect your case and how long it will take to resolve. Your lawyer will streamline your case as much as possible and provide support in the interim while your case is being handled. Swift responses and cooperation with your lawyer can also help make sure that delays are avoided.

What Are My Rights During Franchise Litigation?

In any franchise, the franchisor often has more rights, and the terms of the agreement favor them more than the franchisee. However, this does not mean that franchisees do not have any rights. If they are subject to unfair treatment or contract violations by the franchisor, then they have the right to take legal action. They also have rights during the litigation process. 

A franchisee’s rights will be determined by the terms of the franchise agreement and the Florida Franchise Act. These sources clearly state what protections are available to them and the grounds on which franchisees can take legal action. The options available to franchisors in these situations may depend on the type of dispute and circumstances, so it is important to consult franchise lawyers in Orlando, FL at the outset. Below are a few of the rights you have as a franchisee. 

Right to Secure Legal Representation

You have the right to hire a lawyer to represent you when you have been treated unfairly by a franchisor. These cases are complicated, and you do not have to handle them on your own. A lawyer will help you determine if you have a case, protect your rights, and provide trusted counsel throughout the litigation process. Lawyers have extensive knowledge of franchise law and are skilled communicators. 

Right to Recover

If you have suffered material damages due to fraud, misrepresentation, or bad faith on the franchisor’s part, you have the right to recover those losses through compensation. By filing a lawsuit, you can make a case against the franchisor about their actions and provide evidence of the damages you sustained. You may also be able to recover the value of attorney’s fees as part of your compensation. 

Right to Seek Contract Rescission

If you have been the victim of a fraud, misrepresentation, or other unfair trade practices by the franchisor, you have the right to request that the contract be rescinded. If granted, this absolves you from any further contractual obligations to the franchise and allows you to walk away without repercussions. This option is designed to protect you from additional harm.

Right to Seek Injunctive Relief

If a franchisor is inflicting ongoing harm through malicious or unfair practices, you have the right to petition the court for an injunction to put a stop to their actions. This provides you with relief so you do not sustain further losses at their hands. This tool can be used to provide temporary relief pending further legal action or to issue a permanent stop to the actions in question. 

Contact Our Orlando Lawyers to answer questions like: “How Does Franchise Litigation Work?” 

At Luther Lanard, PC, we understand that franchisee litigation can be overwhelming and stressful, and our team helps you navigate the legal process. We provide step-by-step guidance through each phase to help you secure the most favorable outcome possible and protect the business you have worked so hard to build. To talk with one of our skilled litigation attorneys, contact our Orlando office to schedule a consultation today.