How can I quit a franchise agreement?

UPDATED: Oct 1, 2022

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How can I quit a franchise agreement?

I’m a franchise owner but my business has been going under for almost 2 years now. I can’t make any money from it and have been trying to sell it for the last year with no luck. I’ve informed my Franchiser about my situation but they haven’t been able to come to a conclusion and they would only retake the store from me if I can somehow get the rent down the landlord won;t budge on the rent. How can I quit my franchise? With their current model I don’t think anyone can make money at this location and I don’t see a way out other than maybe bankruptcy but I don’t know how that works and don’t want to get involved with that.

Asked on January 8, 2019 under Business Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

The franchise agreement is a contract; as with any contract, the difficulties you are having or your personal situation have no bearing on the contract. You can only get out of the agreement if one of the following applies:
1) There is some early termination clause or provison in the agreement.
2) The franchisor voluntarily agrees to let you out.
3) The franchisor violates some material or important term of the contract.
4) You can show that the franchisor lied about something material to get you to enter into the agreement (committed fraud).

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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