Practice Areas
Our People
News & Resources
Book Consultation

Q
Views63,522
I am running a franchise business, and there are often cases in which some franchise stores do not sufficiently follow the headquarters' guidelines or direction. In such cases, there seems to be no alternative other than terminating the contract with the franchise store, but could franchise litigation arise even if the headquarters terminates the franchise agreement? I would like to know in detail from a franchise attorney about the legal risks regarding this issue.
franchise attorney
franchise litigation
franchise specialist attorney
Answer
Published:
Author : Kuk Il KIM
Yes, terminating the contract of a franchisee may lead to franchise litigation.
The headquarters, that is, the franchisor, must meet several requirements when it seeks to terminate a franchise agreement with a franchisee.
First, only when several grounds that make it difficult to continue the franchise agreement apply can the headquarters terminate the franchise agreement.
Representative grounds on which a franchise agreement may be terminated
▶ where the franchisee files for bankruptcy, or compulsory execution proceedings or rehabilitation proceedings have commenced
▶ where the bills or checks issued by the franchisee have had payment suspended due to dishonor or similar reasons
▶ where the franchisee can no longer operate the franchise business due to a natural disaster, a serious personal reason, or the like
▶where the franchisee has received an order revoking a qualification, license, or permit, or a business suspension order, for violating statutes related to the operation of the franchise store
If it is difficult to determine whether such a ground exists, it is advisable to seek advice from a franchise attorney.
If such a ground arises and the franchisor wishes to terminate the franchise agreement, the franchisor must notify the franchisee with a grace period of two months or more.
In particular, notice must be given in writing two or more times, stating the "specific facts of the contract violation" and stating that the "contract will be terminated if the violation is not corrected." This is mandatory.
If a franchise agreement is terminated without such notice, it has no legal effect, so it may lead to litigation; therefore, it is advisable to have it reviewed by a franchise attorney.

General Corporate Matters 변호사
법률상담예약
모든 상담은 전문변호사가 사건 검토를 마친 뒤
전문적으로 진행하기에 예약제로 실시됩니다.
가급적 빠른 상담 예약을 권유드리며,
예약 시간 준수를 부탁드립니다.
만족스러운 상담을 위해 최선을 다하겠습니다.
전화
상담 1800-7905
365일 24시간
상담접수가능

카톡
상담
카카오톡채널
법무법인 대륜 변호사

온라인
상담
맞춤 법률서비스를
제공합니다.
All fields At a glance
1/0