You may not realize it, but the cup of coffee you buy from DunkinÃ¢â‚¬â„¢ Donuts, the Happy Meal you order at McDonaldÃ¢â‚¬â„¢s, and the SUV you lease from GM, is delivered to you by a small business owner who has purchased the rights to market these products from the parent company. Franchising now accounts for over 50 percent of retail sales in this country, and its growth rate exceeds the overall economy.
But participation in franchising comes at a steep price – franchise agreements are often inequitable, with the franchisor holding all the power. Although franchisees supply the capital and hard work that make this system thrive, they are afforded few legal rights. State lawmakers are considering two bills that would change that.
Most franchisees are not allowed to change a word in the franchise agreement, meaning they are signing a contract of adhesion, a legal concept that disappeared from commercial contracts a century ago but is still alive and well in franchising. The covenant of good will, which requires contractual parties to act in good faith and deal fairly with each other, is implied in every commercial contract, except in franchise agreements where the express terms contained in them typically override it. Full post.