Many business owners dream about opening up their own franchise…but only a few actually achieve this. Owning a small piece of the pie of a company with a (proven) track record of success and profitability seems like it can’t miss.
You meet with the head honchos of a particular chain and they tell you that all of their franchise owners are reaching their goals and taking in major profits. You decide to go all in. You get a business loan, sign a franchise agreement, buy in, and off you go.
Except you aren’t reaping in profits and things look bleak. You think you may have been bamboozled by the company’s bigwigs and you start to think they were not completely honest with you. What do you do? Are you completely out of luck? Are you stuck with this loser of a franchise?
The answer to ALL of these questions is: maybe.
Florida has in place some franchise laws that are aimed at protecting franchisees in certain circumstances. So here is the Florida Franchise Act explained.
The Florida Franchise Act
Under the Florida Franchise Act (“the Act”), when selling a franchise in Florida, it is unlawful for the franchisor (the main company) to make any misrepresentations to the potential franchisee (you) about the chances for success or prospects; the required amount of total investment or; the franchisor’s efforts in establishing other franchises in the same market.
The Act essentially provides a mechanism for a franchisee to bring a civil cause of action (i.e., a civil lawsuit) against the franchisor if one or more of the above listed things may have happened.
If a franchisee can prove to the court that the franchisor violated the Act, the remedy includes the return of all monetary investments made in the franchise and reasonable attorneys’ fees incurred for bringing the lawsuit.
Are you Doing Business in Florida?
One other very important piece of the Act is the definition of who can bring a lawsuit under the Act. The Act provides that “an individual, partnership, corporation, association, or other entity doing business in Florida” (Emphasis supplied) may bring such an action.
And the phrase, “doing business in Florida” is not exactly black and white given the few cases that have examined the issue.
Meet with an Experienced Business Litigation Attorney
Therefore, if you feel like a franchisor may have made misrepresentations to you when inducing you to enter into a franchise agreement, it is important that you discuss your case with a business litigation attorney who has experience with Florida’s Franchise Act. An attorney will advise you as to what facts and evidence may determine the outcome of your case.
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