Association Negotiation
Worked with franchisee association in renegotiating terms of franchise agreement for entire system, allowing for greater cooperation with franchisor.
STRATEGY
What Is Franchise Fraud?
While it may seem that any misstatement or exaggeration in the franchise sales process would constitute fraud, the law is more nebulous. Some marketing promises are considered by the courts as “mere puffery” rather than misrepresentation and therefore won’t be considered legally fraudulent.
Fraud is when a factual misrepresentation is made rather than an exaggerated opinion. This can occur through misrepresentation (when claims are exaggerated or understated) or omission (when important information is kept from the franchisee entirely). These situations can include unrealistic financial projections, false promises of exclusive territory, omitted lawsuits, or FDD red flags, and more.
Because of the specifics of franchise fraud, it is important to have a franchisee attorney on your side to help navigate the system and determine the legal misrepresentation by the franchise.
What Are the Legal Rights of a Franchisee?
Franchise agreements nearly universally contain disclaimers of prior representations. In other words, when you sign a franchise agreement, you often agree that there were no representations that you relied on outside of the written franchise disclosure document and franchise agreement. While these disclaimers can be effective for franchisors in defending fraud claims, this is not always the case.
For example: (a) the disclaimers may be overbroad and not specific to the misrepresentation made; (b) you may have protections under certain state franchise laws; or (c) the disclaimer may not protect the franchisor from claims for fraud by omission.
If you feel you were sold a franchise under false pretenses, it is important to talk to a franchise lawyer as soon as possible. In addition to statutes of limitations, there are also often contractual limitations periods that provide a deadline by which you have to pursue your claim or you are forever barred from doing so.
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Franchise Fraud and Mispresentation Case
Court ruling nullifies franchise agreement in favor of franchisee. Our client, a franchisee of a dog grooming business, suffered from multiple franchise law violations by their franchisor, so we filed a lawsuit on the franchisee’s behalf. The court found that the franchisor made material misrepresentations, failed to disclose information required under franchise law, and breached its obligations under the franchise agreement. Our team obtained a judgment cancelling the franchise agreement, effectively nullifying it as though it had never been signed, allowing our client to operate independently outside the franchise system.
Industries We Serve
Experienced Lawyers Who Care
No matter your industry, our franchise misrepresentation attorneys are ready to support your legal needs and help you take action.
Start Your ConsultationKNOWLEDGE
What Are Examples of Franchise Fraud an Attorney Can Help With?
We have helped franchisees recover damages and/or get out of franchise agreements where the franchisor (or franchise brokers) induced the sale of the franchise by fraud. In some cases, the misrepresentations relate to:
- Projected or historical financial performance of franchisees;
- The uniqueness or proprietary nature of the system and materials/equipment; or
- The failure to provide information otherwise required to be disclosed.
For franchisee clients, we have successfully asserted claims against franchisors for fraud, resulting in, among other things: (a) negotiated recovery of damages; (b) rescission of the franchise agreement; (c) negotiated exits from the franchise system; and (d) prevailing in arbitration proceedings.
SUCCESS
Why Garner, Ginsburg & Johnsen?
Our franchise attorneys have extensive experience helping franchisees fight fraud. We’ve represented franchisees and dealers, helping them to over $240 million in settlements because of our proven results, sterling reputation, and national reach. When you work with our law firm, you get a team that has:
- 20+ years experience representing franchisees
- Represented franchisees and dealers in over 250 systems
- A transparent and personalized approach to legal guidance
- Award-winning, precedent-setting experience
- Attorneys licensed in Minnesota, New Jersey, New York and Colorado
Results
Startup Helper
Assisted new brewery client to form business entity, comply with securities laws, register trademarks, and negotiate lease.
Selling a Cannabusiness
Litigated and helped resolve an internal shareholder dispute about ownership of a cannabis business.
Testimonial
Elliot Ginsburg has been representing my edibles business in Minnesota since it became legal to sell low-dose hemp edibles. He’s been wonderful to work with and I would highly recommend him to other cannabis businesses. He is quick to respond and will email cannabis law updates that he finds are pertinent to my business.
-Ranelle Kirchner
Testimonial
I had the experience of working with Elliot twice over the past ten years in difficult and contentious situations against a formidable entity. Beyond his great knowledge of franchise law, his thoroughness and attention to detail, and his professionalism, what really stood out and impressed me most was Elliot’s legal advocacy that is second to none. I always felt I was in good hands and I can’t give a higher recommendation!
-Eric Kim
Testimonial
Throughout my time overseeing a PE firm for the past 15 years, I’ve interacted with my fair share of lawyers. While most are decent, it’s rare to encounter those who are truly outstanding. I’m pleased to report that Elliot, Kirsten, and Erin fall into the latter category. My team found ourselves in a particularly complex situation, and Elliot and his team delivered the very best possible outcome for us. They exhibited professionalism, conciseness, and exceptional ease to collaborate with. They swiftly gathered all pertinent information surrounding our issue, assumed control, steering the situation while consistently seeking our input and guidance. If you have any issue with franchise law, you should call these guys. I’m so glad I did.
-Drew James
Testimonial
I cannot say enough good things about Elliot Ginsburg of Garner, Ginsburg & Johnsen, P.A. I retained Mr. Ginsburg in connection with a franchisee matter. Elliot is professional, thoughtful, intelligent, clever, fair and reasonable. His legal work is thorough and well researched and he takes extra precautions to verify factual information. He has the admirable ability of being calm and professional yet firm, even when met with less than professional behavior from opposing counsel. I spoke to many attorneys before deciding to go with Elliot and I know that I made the right decision. I would not hesitate to recommend Elliot (or the firm in general) to anyone needing the assistance of a franchisee attorney.
-Alyson Domoto
Testimonial
I was represented by Erin Johnsen dealing with a successful franchise closure and a lease termination. Erin was very responsive and thorough with both issues. Erin and I reviewed courses of action before moving forward. She listened and gave advice related to risk and exposure of the options we were reviewing. I alway felt that Erin had my best interest in mind when giving me advice on how to proceed. I wouldn’t hesitate hiring Erin again if required. I would recommend Erin as a competent and capable attorney.
-Steven Pierce
Testimonial
I had the pleasure of working with Elliot Ginsburg. He helped me renegotiate and revise a 10-year lease for my coffee shop. I was impressed with how thoroughly and promptly he addressed all of my concerns. He has amazing attention to detail and gave very thoughtful responses to my questions. He even came out to my shop multiple times to get a better understanding of my leasing situation. I would certainly work with him again or recommend him to anyone.
-Caitlin Shrestha
Testimonial
Erin Conway Johnsen helped guide us through a challenging situation with a newer franchise. She was patient with us, listened to our issues and was able to provide work that leveled the playing field with the franchisor. I would HIGHLY suggest her and her team for any challenging franchise situation.
-Paul Rakovich
Testimonial
We consulted with Elliot Ginsburg to help us review and interpret the franchise documents and agreements before investing. He was incredibly helpful and knowledgeable in content and process as well as the legal implications of “common language.” His expertise was critical as we negotiated and maneuvered the process. I am so glad we found Elliot and the firm.
-Mark Mendel
Testimonial
Elliot Ginsburg (Garner & Ginsburg, P.A.) was a beacon of hope to my business/family at a time when our options appeared limited, and the likelihood of a satisfactory resolution seemed to border on the unlikely. He fought diligently and successfully for my rights as a small business-/Franchise-owner and was unwavering in his pursuit of a fair outcome.
Not only was Elliot able to defend my business from unjust accusations, but his calm and empathetic demeanor also offered emotional succor to myself and my situation. My family and I are eternally grateful for his service, and I hereby recommend Elliot Ginsburg (Garner & Ginsburg, P.A.) without reservation.
-Brandon Gruskiewicz
Experience the Difference
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