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Question added to topic Legal Basics For StartupsMay 8, 2008

Can a franchisee sue a franchisor for misrepresentaton?

I bought a cleaning franchise over 2.5 years ago. I've had all sorts of problems from the start in terms of marketing and getting customers, even though the franchise stressed there was a high amount of demand in the territory. The franchise promised to assist in marketing but their help wasn't useful. I followed their marketing program and basically have run out of money. Two other new owners in my area have already opened and closed because of not enough demand. What can we do?
Franchises have been known to have a checkered past, which is why they involve regulation and disclosure documents. So, you <EM>can</EM> bring a lawsuit against a franchisor for misrepresentation, but it's not an easy claim to prove. A lot depends on how the disclosure documents were written and the promises that they contained. Before you throw a lot of money at litigation, consult with a franchisee lawyer who regularly litigates these kinds of issues to evaluate the strength of the case. It would be a shame to throw good money after bad.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

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