What to Do if Your Franchisor Issues You With a Breach Notice 

Receiving a breach notice from your franchisor can be a daunting experience. But, it is essential to understand that this notice is a formal communication and that you must take immediate action. A breach notice outlines violations of the franchise agreement, allowing you to rectify these violations within a particular timeframe. The franchisor wants you to address specific issues within your franchise operations. Acting promptly and thoughtfully is crucial in maintaining your franchise relationship and avoiding further legal complications. This article explains what you should do as a franchisee if your franchisor issues you with a breach notice. 

1. Read the Breach Notice 

The first step is to read the breach notice carefully and understand which franchise agreement provisions the franchisor believes you have breached. It should highlight the specific terms you have violated and how you have done so. If the franchisor does not provide this information, ask them to clarify the breach notice. It will be challenging to rectify or dispute if you do not understand what has gone wrong. 

Think carefully about what they have communicated to you. As a franchise agreement is a legally binding document, breaches of its terms are a serious matter as they are contractual obligations. Breaches can lead to:

• legal action;
• financial penalties; and 
• potential termination of the agreement. 

Termination means losing the business you have built and invested time and money into, so prompt action is necessary. 

2. Keep Records 

Throughout this process, keep detailed records of:

• all communications between you and the franchisor; 
• any documents you exchange; and 
• the actions you take to resolve any breaches. 

This documentation will be essential if the dispute escalates or legal action becomes necessary. 

For example, perhaps the franchisor spoke or wrote to you when they issued the breach notice and communicated their concerns verbally or via email. If so, you should keep a record of this conversation and any others relevant to the situation. 

3. Rectify the Breaches 

You should take immediate action if the franchisor’s notice is reasonable and highlights how you have breached the franchise agreement’s terms. If you can quickly resolve the problem, do it immediately. 

Some breaches might be more challenging to rectify in a short timeframe. Others might require you to invest more money into your business. If this is the case, discuss these constraints with your franchisor and explain why you might need more time or support to resolve the problem. 

4. Communicate with the Franchisor

You should maintain open lines of communication with the franchisor, particularly during this time. Not doing so can worsen the situation. This may lead the franchisor to think you are not taking action. Keep them informed about the steps you are taking. This communication can demonstrate your commitment to rectifying the breaches and potentially prevent further escalation of the dispute. 

5. Negotiate if Necessary 

Sometimes, you may need to negotiate with your franchisor to resolve the breach notice. Your negotiations might involve: 

• requesting an extension of the timeframe to rectify the breaches; 
• proposing alternative solutions to address the franchisor’s concerns; and
• seeking to amend the terms of the franchise agreement if you think they are unreasonable or unclear. 

If you cannot remedy the breach or think the notice is invalid, communicate to your franchisor. If you want to dispute the breach notice, follow the franchisor’s dispute resolution framework. This should be in your franchise agreement or the operations manual. 

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6. Seek Legal Advice 

It can be crucial to consult a franchise lawyer as soon as possible. A lawyer can:

• provide a professional, legal assessment of the breach notice; 
• help you understand the legal implications of the breach notice and potential consequences; and
• advise you on the best course of action which might involve rectifying the breaches, negotiating with the franchisor, or disputing the notice.

Key Takeaways

If your franchisor serves you a breach notice, this serious matter requires immediate and careful attention. You should:

• carefully read and understand the breach notice; 
• keep records of all communication between you and the franchisor; 
• rectify the breaches, logging the actions you take; 
• maintain open lines of communication; 
• negotiate with the franchisor if necessary; 
• follow the franchisor’s dispute resolution procedure to dispute the breach notice; and
• seek legal advice if necessary. 

Understanding and following these steps can protect your business interests and maintain a positive relationship with your franchisor. Throughout the process, clear communication and a proactive approach are critical to effectively resolving the situation and ensuring your franchise location’s continued success. 

If you would like legal advice about a breach notice, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.