The liability for the wrongful termination of a franchise agreement can be considerable, lost profit for the remainder of the franchise term and perhaps other damages.
Here is the facts Franchisor requests licensee to remodel the franchise location to conform to current standards. Licensee does not. Franchisor sends franchisee a default notice for failing to update the location. Licensee still does not update. Franchisor sends the licensee a notice of termination, files a complaint in court staying the termination. Licensee de-brands and continues to operate under a new name.
Can the Franchisor be held liable for wrongful termination?
The case is Buffalo Wild Wings, Inc., v. BW-3 of Akron, Inc., et al.[i] No, said the court. Since the Licensee closed the business, de-branded, and opened under a different name, the Licensee abandoned the business. The Franchisor never terminated the license. The Franchisor is not liable for wrongful termination.
Interesting case, but would the come be different if the
franchisor had not stayed the termination?
[i] No. 17-4291
Business Franchise Guide – Explanations, Laws, cases, rulings, new developments ¶16,378
Buffalo Wild Wings, Inc., Plaintiff/Counter-Defendant-Appellee v. BW-3 of Akron, Inc., et al.