What are the most common disputes between franchisors and franchisees?

In California, some of the most common disputes between franchisors and franchisees involve compensation, advertising fees, and contract violations. Franchisees often feel that their franchisors are taking too big of a cut of their profits, or that their fees are too high. Often, franchisees are also unhappy with the quality of advertising support they receive from their franchisors. Finally, there can be disputes over compliance with the original terms of the contract, such as the franchisor not providing agreed upon services, or the franchisee not adequately performing their obligations. When disputes arise between franchisors and franchisees, both parties will typically attempt to negotiate a resolution before reaching out to legal counsel. If a negotiation fails, then the parties can opt to file a lawsuit, but this can be costly and time consuming. Consequently, most franchisors and franchisees will attempt to mediate their dispute, or try to reach an informal resolution. In some cases, the conflict may be resolved through arbitration, which is a less formal, more efficient, and more affordable option. If the dispute can’t be settled through these avenues, then a lawsuit may be necessary to protect the rights of both parties.

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