Florida Franchise Act: Protections For Franchisees
A franchise opportunity offers up the chance to invest in, and replicate, a company’s successful business model. In many cases, new franchises lead to excellent results for both sides of the arrangement. But, sometimes substantial misrepresentations are made to franchisees in order induce their investment. Misrepresentations are prohibited under Florida franchise law. If you are a franchisee, and you believe that misrepresentations were made to you, please contact an experienced West Palm Beach franchise law attorney as soon as possible.
The Florida Franchise Act prohibits franchisors from making substantial misrepresentations about the state of the business opportunity as a means of encouraging an investment. Specifically, a franchisor cannot:
- Mislead about the chances of success;
- Mislead about the past or current profitability;
- Mislead about the real cost of the investment; or
- Fail to disclose the existence of additional franchising efforts in the same market.
Florida law is clear, a franchisor is obligated to give an honest and fair assessment about the state of the business. Further, when courts have reviewed cases under the Florida Franchise Act, they have held that a franchisor can not get away from liability for misrepresentation by simply sliding a disclaimer into the agreement. In a 2012 case a court held a franchisor liable for misrepresentation even though the franchisor included a disclaimer in the franchise agreement stating that profitability was not guaranteed. Even with that disclaimer, the court ruled in favor of the franchisor because he sold the investment using extremely unrealistic charts that projected future profits, and he misrepresented the financial status of other franchised locations in similar markets.
A form disclaimer will not protect a franchisor who is making a substantial misrepresentation.
How to Protect Your Franchisee Rights
When making an investment in a franchise, it is always ideal to be as proactive as possible. For example, if you are considering entering a franchise agreement, you should hire a business litigation attorney, with direct Florida franchise law experience, to comprehensively review your agreement. An attorney may be able to protect you from a misleading investment. But, even if you have already entered into an agreement, if you were negatively impacted by a franchisor’s misrepresentation, an attorney can help. You are protected from substantial misrepresentation under Florida law. You deserve full and fair compensation for your damages. Under the Franchise Act, you may be entitled to recover the entirety of your investment along with associated attorney’s’ fees. You need to act quickly in these cases. Franchise law is complex, and proving misrepresentation can sometimes be challenging. You should get your case in the hands of an experienced attorney as soon as you recognize a problem.
Contact An Experienced West Palm Beach Franchise Law Attorney
A franchise is a major business investment, as a franchisee, you deserve to be treated fairly in the process. A franchisor may not make substantial misrepresentations in an effort to encourage to sign a franchise agreement. The business litigation team at Pike & Lustig, LLP has deep experience working with all aspects of Florida franchise law. Please do not hesitate to contact our West Palm Beach office today for a free legal consultation.