9 6. Restrictions at the discretion of the franchisorThe good: the franchisor and the franchisee agree explicitly, honestly, in good faith, non-discriminatory and commercially reasonable. The worst part is that the franchise agreement does not say whether the parties will act reasonably or some otherhow. What is ugly: the franchisor claims the explicit right to exercise his corporate judgment in a way that is useful to him in his “business judgment” or in his “sole discretion”. 13 10. Point 8 in the franchise disclosure documentThe voucher: Franchisor expressly agrees to make its best efforts to negotiate with suppliers for the benefit of franchisees, undertakes not to accept payments from a supplier for itself and agrees to transfer its franchisees in proportion to all available loan payments. The bad: Franchisor does not negotiate for the benefit of its franchisees and makes payments from suppliers on the basis of franchisee purchases, but commits to depositing all these payments into the national advertising fund, but with broad discretion as to how these payments are spent. The ugly: Franchisor does not negotiate for the benefit of its franchisees and takes payments from sellers on the basis of franchisees who purchase the necessary goods and services, but claims the right to use these payments for any purpose. 11 8. Dispute Resolution The Good: the franchisee has the right to bring or arbitrate before a single arbitrator in the state where the franchise is located, in the state where the franchise is located, without relinquishing its right to a jury, without any restriction as to the nature of the refundable damages and without contractual shortening of the applicable statute of limitations. The worst part is that all disputes between the parties must be tried before a group of three arbitrators in the franchisor`s home state, in accordance with the laws of the state where the franchisor`s Home Office is located, or before a group of three arbitrators. What is ugly: all disputes must be resolved before a panel of three arbitrators in the state where the franchisor`s Home Office is located, with a waiver to the jury, with restrictions on the nature of the refundable damages, with a contractual reduction in statutes of limitations otherwise in force and with the franchisor who asserts a single-use right of legal fees and fees in any dispute that arises.
To argue. 4 1. The duration of the relationshipThe Good: consubs teur, unlimited, renewal conditions, with renewal contracts that do not differ significantly over time. The bad news: limited renewal fees that explicitly allow for substantial and detrimental changes to renewal contracts. The ugly: no renewal rights, the franchisor claiming the right to acquire the activity of the franchisee at the end of the period for the fair value of the hard assets.