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Why should franchises be terminated properly?

Business owners in Georgia like you may have become involved with franchising or partnerships in order to grow your business. But these partnerships aren’t always cut out for the long haul. We here at Kaufman & Foreman, P.C., understand that you may want to let a franchise or partnership go. However, you should do it in accordance to the terms of your contract.

The American Bar Association states that there can be severe consequences for improper termination. First, it should be noted that franchises or other protected partnerships should not be ended unless there is good cause. Additionally, there are certain requirements and notices that need to be given in order to make the split official. In some cases, you will only be able to end a franchise, partnership or contract if the other party has done something to wrong you or the company, or to tarnish your image. The terms can vary from contract to contract, so make sure that you know yours well.

However, all contractors must be notified of the fact that a contract is being terminated. This is true even if you have an at-will contract that you can terminate at any time. Without advanced notification, the opposite party may be able to follow up on a material contract breach. This can intern lead to needing to go to court, which can cost a lot of time and money. You may also end up having to provide civil penalties, or buy back equipment and inventory.

Violating your contract could also end up putting a black mark on your reputation among other businesses, which may make it harder for you to partner up in the future. For these reasons, carefully consider your options and make sure to follow the proper legal path.

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Kaufman & Forman, P.C.
8215 Roswell Road, Building 800
Atlanta, GA 30350

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Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

*AV Preeminent and BV Distinguished are certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards and policies. Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the bar and the judiciary. Martindale-Hubbell ratings fall into two categories: legal ability and general ethical standards.