A Franchise Attorney Who Understands Supplier Restrictions Can Help Franchisors and Franchisees Deal With Challenges and Find Solutions
Purchasing a franchise offers several attractive opportunities for people looking to start a business. You have the benefit of starting a business under an established brand with a good reputation and quick access to customers. In theory, you and the franchisor have a mutually beneficial relationship, which results in the franchisor approving vendors or suppliers that either provide premium products or services to franchisees are provide them at a competitive price. Franchisors can use their scale to negotiate great deals for franchisees but these relationships don’t come without their challenges.
Franchisors and their Approved Suppliers and Vendors
One of the main challenges for franchisors is establishing a strong group of suppliers and vendors to provide products and services for its franchisees. Vendors often do not understand franchising and may not understand that any approved supplier or vendor agreement controls its behavior as to franchisees. This can cause vendors to charge franchisees prices or provide terms that are inconsistent with what was negotiated. In worse circumstances, suppliers can cause issues because the services or products they provide lack quality or have issues that cause repercussions in the franchise relationship. It’s important for franchisors to be proactive and where necessary take action against those parties.
A Challenging Dynamic For Franchisees
Franchisees on the other hand have supplier restrictions, which are limitations on what vendors franchisees can work with and what items franchisees can buy. The franchisor wants to ensure the product served by their franchisees is of uniform quality and at a consistent price. As a result, the franchisor often becomes the sole supplier for various products used in your franchise system or limits the suppliers that a franchisee can utilize. While this may seem to simplify your supply chain and ensure the consistent quality of your product, it can also act to your detriment. You may find yourself stuck using products or services that are of subpar quality or at above-market prices. We can work with you to bring these issues to the franchisor’s attention and negotiate better solutions. Or in some situations, we can litigate those issues by bringing contract or fraud claims based on franchise relationship laws.
Franchisors will always take the position that franchisees are obligated to purchase their products and services according to the terms of the franchise agreement. While this is generally true, this does not necessarily mean that franchisees have no recourse. At Luther Firm, PC, we help our clients successfully resolve issues related to supplier restrictions.
The Value of Working with a Skilled Negotiator
Franchise attorney Doug Luther served as general counsel to a franchisor and has deep experience as a dealmaker in various business contexts. His background gives him a unique insight into how franchisors and suppliers think, what they are motivated by, what problems they need to solve, and where there is room for negotiation. Our experience on both sides of the table helps us get results that many others cannot.
When Negotiations Fail—An Attorney Who Understands How to Litigate Supplier Restrictions Can Help Franchisees
Unfortunately, negotiation cannot resolve some supplier restriction disputes. Franchisors will often take the position that the issue is cut-and-dried, but this is rarely the case. You do not have to let your business suffer simply because your franchisor is unwilling to deliver the quality you need for your business to thrive.
We start by reviewing the supplier restrictions in your franchise agreement and operations manual. That agreement may obligate the franchisor to provide products or services of a certain quality. Alternatively, the franchise agreement may not be consistent with applicable franchise relationship laws. Whatever the case may be, we’ve helped our clients successfully resolve supplier restrictions by bringing breach of contract claims, fraud claims, or other claims asserting the franchisor has failed to meet their legal obligations.
A Franchise Attorney Can Resolve Supplier Disputes
Supplier issues and restrictions are some of the most difficult challenges franchisors and franchisees can face. Fortunately, you have options. If you’re dealing with supplier issues or restrictions, we can review the situation and help you understand your options. Whether you are in Orange County, Los Angeles, San Diego, Southern California, or beyond, contact us to schedule a consultation to discuss your case and how we can help.