Franchisees must ensure with their buyer the standards expected by the franchisor. So the franchisor`s criteria, it applied to you, such as company history, skill, skill, financial insight, etc. should also be maintained with the buyer. Franchisors are careful in selecting you as the first franchisee, so they will also be interested in being as selective when approving an incoming franchisee. 3 The franchisee also submitted that an overcrowding clause in the franchise agreement, which provided for a monthly lease agreement in the event that the franchisee remained in possession and continued to pay rent at the expiry of the franchise agreement, had extended the duration of the contract. The Court of Appeal found that this provision did not extend the franchise agreement, but merely converted the franchisee`s lease into a monthly contract. As the Court noted, the existence of a subscription right provision “that merely creates the possibility of a monthly lease after the expiry of the [franchise agreement] cannot be renewed.” The franchisor must repay all of the money paid by the potential franchisee, as payments made prior to receipt of pre-opening documents must be refunded. Registration: The formal filing process with national franchise regulators has provided certain specific information and forms required by state law. In many states with registration franchise laws, registration is only effective when the franchisor`s application has been approved by national franchise regulators. It is only when all of the above points have been met that a franchisor can benefit from a non-refundable payment from a potential franchisee.
With respect to defamation, we find that the franchisor`s claim was based on the general civil liability regime. In this case, there is no indication that the franchise agreement contained the usual clause prohibiting franchisees from damaging the franchisor`s reputation. The existence of such a clause may have altered the Court of Justice`s analysis. In this way, both the franchisor and the franchisee have, before the signing of the franchise agreement and the lease, a clear idea of the start-up costs of the franchised business (rents, deposits, rental allowances, construction costs, etc.) and have already agreed together on the chosen location (including its location).