Learn About Franchisees’ Rights in Arizona from an Experienced Franchise Attorney
If you own (or are thinking about buying) a franchise in Arizona, you have clear legal rights. This is true, even though Arizona has not adopted franchise relationship or disclosure laws similar to those that exist in many other states. All franchisors must comply with the FTC Franchise Rule and other applicable federal laws and regulations, and franchisors that do business in Arizona are subject to the state’s common law as well. If you have questions about your rights as an active or prospective franchisee, our franchise lawyers can explain everything you need to know.
Understanding Franchisees’ Legal Rights in Arizona
Even though Arizona does not have any franchise relationship or disclosure laws, franchisees in the state still have clear legal rights under both state and federal law. As noted above, all franchisors must comply with the FTC Franchise Rule, and non-franchise-specific laws govern various aspects of the franchise relationship at the state and federal levels.
With this in mind, some examples of active and prospective franchisees’ legal rights in Arizona include:
1. The Right to Make an Informed Franchise Buying Decision
When you are considering a franchise opportunity, you have the right to make an informed buying decision. Under the FTC Franchise Rule, franchisors must provide prospective franchisees with a Franchise Disclosure Document (FDD) that contains all of the required information in each of the FDD’s 23 “Items.” These include Item 23, which states that you must receive a copy of the FDD at least 14 days before signing a franchise agreement or paying any fees (including an initial franchise fee) to the franchisor.
2. The Right to (Attempt to) Negotiate the Terms of Your Franchise Agreement
Franchise agreements are commercial contracts; and, as such, they are negotiable. While franchisors’ salespeople will often try to convince prospective franchisees not to negotiate, you can—and should—hire a franchise lawyer to help you seek appropriate protections. Franchise agreements are notoriously one-sided, and knowing this, most franchisors will be willing to consider reasonable concessions.
This also relates to your right to make an informed buying decision. If a franchisor conceals any material information—whether or not it was subject to disclosure under the FTC Franchise Rule—and this leads you to a decision that you would not have made otherwise, you may be entitled to legal or equitable remedies. Here, too, an experienced franchise attorney can help you make an informed decision about how best to proceed.
3. The Right to Operate in Conformance with Franchise Standards
Once you sign a franchise agreement, you have the right to operate in conformance with the franchisor’s system standards. If you comply with your franchise agreement and the Operations Manual, your franchise should not be in jeopardy.
Unfortunately, for various reasons, franchisors do not always respect this right. Franchise encroachment and wrongful franchise terminations are both common issues. If you own a franchise and believe that your franchisor is infringing on your territorial rights or you have received a default or termination notice that you believe is unjustified, we encourage you to schedule a call with one of our franchise attorneys right away.
4. The Right to Hold Your Franchisor Accountable for Contractual Violations
As a franchisee in Arizona, you have the right to hold your franchisor accountable for contractual violations. If your franchisor violates the terms of your franchise agreement, you can—and should—hire a franchise attorney to help you take appropriate legal action. If your franchise agreement includes a mandatory alternative dispute resolution (ADR) clause, as is typically the case, your attorney can assess its enforceability and guide you through the necessary procedures for seeking appropriate remedies.
5. The Right to Be Free from Discrimination and Other Unfair Business Practices
Under both Arizona and federal law, franchisors (and other businesses) are prohibited from engaging in various forms of discrimination and other unfair business practices. If you are being treated differently from other franchisees, if you are being forced to pay excessive prices for branded products or purchases from designated suppliers, or if you are being forced to pay for products or services you don’t need, you may be entitled to remedies in this situation as well. Once again, an experienced franchise lawyer at the Goldstein Law Firm can help you make informed decisions about how to move forward.
6. The Right to Organize
If you are not the only one experiencing unfair treatment from your franchisor, you have the right to organize. Our franchise lawyers represent associations and other groups in disputes with franchisors in Arizona. This can be a highly effective way for franchisees to assert their legal rights in many cases, though it is essential to work with an experienced lawyer who can help you and your co-franchisees make informed and strategic decisions.
7. The Right to Challenge Unenforceable Non-Competes and Other Franchise Agreement Provisions
While franchise agreements are generally enforceable under Arizona law, there are exceptions. Not all contract terms are enforceable in all cases. For example, in JTH Tax v. Anderson, 2023 WL 2072496 (D. Ariz. Feb. 17, 2023), a federal judge in Arizona ruled that a franchisor could not enforce a franchisee’s non-compete provisions against other entities that the franchisee’s owners also owned. If you have questions about what you can or can’t do under the terms of your franchise agreement, a franchise lawyer at the Goldstein Law Firm can provide the advice you need.
Protecting Yourself When Buying a Franchise in Arizona
If you are thinking about buying a franchise in Arizona, making informed decisions will be critical for protecting your legal and financial interests long-term. While there are never any guarantees when buying a franchise, doing your due diligence and negotiating your franchise agreement (to the extent possible) can help you avoid unnecessary costs and risks.
At the Goldstein Law Firm, we assist prospective franchisees with all aspects of the franchise buying process in Arizona. Our services for prospective franchisees include:
- Assisting with due diligence
- Assisting with preparations for discovery days
- Reviewing FDDs and franchise agreements
- Advising on red flags and other potential concerns
- Advising on how franchisors’ offerings compare to competitive offerings
- Recommending franchise agreement revisions
- Negotiating key franchise agreement terms
We offer multiple tiers of franchise review programs, and you can choose the program that is best suited to your business experience, needs and budget. If you aren’t sure which program to choose, we can help you decide during your free initial consultation with one of our Arizona franchise attorneys.
Protecting Yourself During a Dispute with Your Franchisor in Arizona
If you are facing a dispute with your franchisor, you need experienced legal representation. Even if your legal rights are clear, protecting them almost certainly will not be easy.
Our franchise lawyers have decades of experience representing franchisees in negotiations, mediation, arbitration and litigation. Whether you have a claim against your franchisor or you are facing allegations of breaching your franchise agreement, we can explain the options that you have available and assist you with formulating and executing a strategic approach. While arbitration or litigation will be necessary in some cases, we have extensive experience helping our clients amicably resolve disputes and maintain productive relationships with their franchisors. We can realistically assess your likelihood of success with varying approaches, and then you can use this information to decide how you want to proceed.
We represent franchisees in all types of franchise-related disputes in Arizona—including, but not limited to, those involving:
- Franchise territory encroachment
- Unfair business and franchise practices
- Unlawful tying arrangements and other antitrust violations
- Franchise renewal and transfer disputes
- Royalty and advertising fee disputes
- Attempts to enforce restrictive covenants
- Wrongful franchise terminations
Again, these are just examples. If you are facing any type of dispute with your franchisor, we encourage you to contact us to discuss what we can do to help. We have helped franchisees in Arizona, as well as franchisees in other states that need to pursue or defend against claims in disputes with Arizona-based franchisors. In these situations, informed decision-making is critical, and we are more than happy to work with you to identify all relevant facts and assess your rights and options under the law.
When it comes to protecting your legal rights as a franchisee, time can be of the essence. Franchise agreements frequently include contractual limitation periods that are much shorter than the statutes of limitations that would otherwise apply. With this in mind, if you are facing a dispute, we strongly encourage you to speak with one of our franchise lawyers as soon as possible.
Contact the Franchise Attorneys at the Goldstein Law Firm
If you would like to speak with an attorney about franchise law in Arizona, we invite you to get in touch with the Goldstein Law Firm today. We will arrange your free initial consultation with one of our attorneys as soon as possible. Call 202-293-3947 or tell us how we can help online to get started today.
