When a franchisor invades a franchisee’s territory, either by placing new units unreasonably close to an existing unit, by placing temporary or seasonal outlets near the franchisee or by selling over the Internet into the franchisee’s territory, the franchisor may be encroaching on the franchisee’s territory.
Franchisor encroachment is getting more common as competition between franchise systems increases, geographic markets become saturated, and technology makes it easier for the franchisor to sell directly to the franchisee’s customers.
If my franchisor is encroaching, what are my rights?
Depending upon what your franchise agreement and Franchise Disclosure Document (or UFOC) say, and what the history of your dealings with your franchisor has been, you may have the right to stop the franchisor from encroaching on your territory or you may be able to recover damages for encroachment. Further, the written agreement does not always control; courts have held, repeatedly, that even though a franchisee may not have a “territory” or a grant of “exclusivity,” that the franchisee is entitled to protection against predatory encroachment that would injure the franchisee’s business.
What Experience does Michael Garner have with Encroachment?
Michael was one of the first lawyers in the country to address the issue of encroachment and he has continued to be one of the leading members of the franchise bar on this issue. He has stopped franchisors from encroaching on franchisee territories by obtaining injunctions or negotiating with the franchisor. See Case Studies for further examples.
How can we help?
If you believe that your franchisor has wrongfully encroached on your territory or your rights, or that your franchisor may be about to do so, then please contact us for a free consultation.
Frequently Asked Questions About Franchise Encroachment: