The law tends to favor the franchisor over the franchisee when it comes to breaking a franchise contract, primarily because franchisors are able to limit their liability via UFOCs and franchise agreements with built-in clauses and disclosures. It’s no wonder that franchisees have little wiggle room when opting out of an agreement: franchisors are required to list and substantiate earnings claims, current and past litigation, the number of franchises in operation and the number terminated, and all other related material in the UFOC/FDD document. Occasionally franchisors will provide a buyout clause to franchisees, but most franchisors want to preserve franchise agreements to save money and time. Hence, franchisors generally make every attempt to reconcile problems via arbitration or mediation.
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