May 01, 2018 Substantive Law

Precision in Drafting Franchise Agreements: Expiration Versus Termination

By Benjamin B. Reed

Reprinted with permission from The Franchise Lawyer, Spring 2018 (21:2), at 12-14. ©2018 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

In litigating cases involving the end of a franchise relationship—be it holdover situations, efforts to enforce post-term noncompetes, or disputes over the parties’ respective rights and obligations after the agreement ends—the question of whether the relationship has actually ended can often be at issue. A franchisee might contend that the franchisor had no right to terminate the agreement, that the reason given for the termination was a pretext, or that the parties agreed by conduct to continue the relationship after expiration of the initial term. A franchisor might assert that its termination complied with the letter of the franchise agreement, that the franchisee cannot undermine the right to terminate by asserting prior breach by the franchisor, or that the franchisee must comply with certain post-termination obligations.

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