Most franchise agreements impose a general obligation on franchise owners not to bring their franchise into disrepute. Sometimes franchise agreements go further and require franchisees not to denigrate the franchisor or, indeed, in some instances not to talk to others or participate on the internet in any activities whose aim may be to attack the franchisor. As a result, it is always important to check the provisions of your franchise agreement first to see what contractually you are not allowed to do. Having said that, the courts would be very reluctant to prevent franchisees from airing valid concerns about their franchisor and so would interpret any contractual prohibitions narrowly.
Even if there are no contractual restrictions, care does need to be taken. Commercial common sense suggests that a public attack on a franchisor will, inevitably, raise the stakes of any dispute. Clearly, most franchisors cannot allow anyone, let alone their own franchisees, to make unfair or untrue comments about them which would be damaging, not only to the franchisor but to other members of the network. You can certainly expect a very strong reaction from a franchisor that felt it was being treated unfairly. This means that you must ensure that if you are seeking information from other franchise owners or wanting to encourage other franchise owners to take action with you in relation to the activities of the franchisor, that you base any comments on verifiable facts and that you seek to avoid unnecessarily inflammatory language.
Written by: John Pratt
Partner, Hamilton Pratt