If the franchisee corrects the violation on time, you cannot terminate the offence. However, you should be aware that in the event of a transfer, an exit payment is often required to compensate the franchisor for future lost franchise fees/licences. On the other hand, if you have contributed financially to the equipment of the commercial premises, you can possibly deduct this amount from any exit payment that the franchisor wishes to impose. If you deny the alleged violation or do not think the act required or the time required to remedy it is appropriate, then you should try to negotiate a solution with your franchisor and seek legal advice. If the franchisee`s directors have given a personal guarantee, a departure could expose the guarantors` personal assets to risk. As I said, the general principles of the contract apply to the termination of a franchise agreement. In practice, however, because the franchise agreement is prepared by the franchisor, there are generally differences in practice between how a franchisor terminates a contract and how a franchisee terminates its relationship. If you are in this position, you can use the dispute resolution procedure prescribed by your franchise agreement to finally announce a termination. Their ability to do so depends on the seriousness of the franchisor`s offence and whether he did anything to remedy the offence. A franchise agreement is a contract between the franchisor and the franchisee. You should read it carefully and note the termination clause indicating when, how and by whom the contract can be terminated.
It should also contain a language that regulates what each party can or cannot do after resigning. The code does not give you the right to terminate a franchise agreement. Whether you have the right to terminate a contract and under what circumstances is generally determined by the terms of your franchise agreement. Renewal: the Green Thumb Case: Grow with Us Limited v Green Thumb (UK) Limited (July 2006): First, a word about the renewal of franchise agreements. The usual provisions are (generally) that a franchisee has an explicit right to renewal, provided certain conditions are met, including: 1) he has not committed any substantial offence during the life; 2) it is no higher than (say) 9 and less than (say) 3 months before expiration; 3) he is not injured if he refuses or if he refuses to do so; 4) it signs a new agreement on the standard terms of the time or on the same terms as its existing franchise agreement. Arguments are often made as to whether the time to correct offences is appropriate.