If a franchisor refuses to renew, what are your remedies? I’ve been doing this work for franchisees and dealers for a long time. And this issue about renewal comes up more and more often. I used to argue. I’ve given up because I’ve been unsuccessful, that what’s the difference of termination or non-renewal; you’re out of business either way, so the protections that relate to terminations should apply to non-renewals. Unfortunately, the case law, the decisions by judges over the years, said no, a non-renewal – at the expiration of the term in the written agreement is different than a termination during the term of that agreement, and so different principles apply.

And so if you receive a notice that you’re not gonna be renewed, that’s an issue that we have to deal with. And one way we deal with it is to help get enacted, and about 16 states have statutes that prohibit franchisors from not only not terminating, except if they have good cause after notice of deficiency of effort to cure, but also they may not non-renew absent good cause, the notice of deficiency and opportunity to renew. So the statute of protection is helpful if the writing is bad.

We also want to know might that bad language in the writing had been changed by a course of dealing that this particular franchisor or supplier always renews if indeed the franchisee or dealer is capably performing. But we like to see something in the writing that’s helpful; if not, we like to see something in the statute that’s helpful; if not, we also need to take a look at course of dealing to see what we might argue. The related issue on renewals is interesting, and that is sometimes franchisors and suppliers will come out with a new contract at renewal time, so it’s not non-renewal, really, but it’s, here, sign this new agreement if you want to be renewed.

And the agreement is so dramatically different and more onerous the franchisee or dealer, they look at it and say, “I can’t possibly make any money with this document.” And I had a case down in the southern Midwest, a couple of states down from Minnesota here, where they were proposing a very different contract. And my client was an implement dealer, and just knew he just couldn’t make a living with this new contract. And so we went into court, and asked for an injunction prohibiting them from non-renewing us, and directing the supplier to give us a contract like what we had before.

And what I said to the judge is, “Judge, my wife says let’s renew our marriage vows, I think she means with me. And, secondly, when she says renew our marriage vows, I’m thinking she is not gonna propose one of these open marriage deals either. It’s gonna be like what we had before. That’s what the word “renew” means. And the judge, unlike you, chuckled when I said that, and granted the injunction. But the concept of renewal is to do again what you were doing before.

And so I call it a Michael Dadyium. It meant a lot of suppliers and franchisers cross the word “renewal” out of their documents, and they now say at the end of this agreement, we may offer you a new agreement, but it could be substantially different than the one you now have. So then we have to come up with other arguments to help our clients be able to continue that relationship in a way that makes sense to them and their supplier or franchisor.