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Attorney specializing in franchise law, if the head office provided exaggerated information, can I claim damages?

I run a convenience store. When I was first considering opening the store, the head office persuaded me by showing me something like data on the average sales from the previous year. As it turned out, that data had excluded franchise stores with low sales. My sales are so poor now that I feel as though I was defrauded. Attorney specializing in franchise law, can I file a claim for damages against the head office?

attorney specializing in franchise law

franchise attorney

Answer

Published: 2025-04-11

Author : DongIl PARK

Yes, a claim for damages may be possible.

Under the Fair Transactions in Franchise Business Act, where a franchise agreement was concluded based on false or exaggerated information provided by the franchisor, that is, the head office, damages can be claimed.

In this case, the franchisee can, against the franchisor, assess the amount of damages for the "loss of business" and claim it.

This is because, under the Fair Transactions in Franchise Business Act, the franchisor has an obligation to calculate the expected profit situation on objective and accurate grounds and to convey it to the franchisee.

If the franchisor arbitrarily manipulated or exaggerated the expected sales, or understated them, this clearly constitutes a violation of the Fair Transactions in Franchise Business Act.

However, if this matter leads to litigation, you must thoroughly prove that the head office's data was exaggerated, so securing the materials is more important than anything else.

In addition, you must also prove that the franchisor's false or exaggerated information actually has a causal relationship with the franchisee's business loss, so precise advocacy is essential.

Therefore, if you are experiencing such a problem, it is advisable to get help from an attorney specializing in franchise law who has expertise in the relevant field.