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Franchisee rights
Freedom of
speech
Manzoor Ishani looks at the issues
surrounding franchisees and their
rights when it comes to any potential
grievances with their franchisors…
F
RANCHISEES ARE increasingly better informed not only about
their rights but also about various ways in which they can bring
pressure to bear on their franchisor with whom they may be
in contention. Franchisors, on the other hand, are increasingly aware of
the need to protect their reputations, particularly those facing increased
competition.
Clauses in franchise agreements which are usually referred to as non-
disclosure provisions have been commonplace for some time. These
are clauses which prohibit a franchisee from disclosing to third parties
(other than their professional advisors) the contents of their franchise
agreements, details about their franchised business or that of the
franchisor and the method of operation of a particular franchise.
The reasons for such a prohibition are obvious. Franchisors
expend a good deal of money in establishing the wherewithal
to franchise and it is therefore not surprising that they seek to
guard jealously those matters which they perceive to be
confidential and of value to them. Included in this, of
course, is the franchise agreement. Having said
that, it does depend upon the franchisor.
Some franchisors freely distribute not specifically authorised by the franchisor
copies of their franchise agreements and in particular anything about a dispute
to prospective franchisees at a very a franchisee may have with his or her
early stage of discussions with them. franchisor or indeed any dissatisfaction
Others, however, are reluctant to with the franchise or the way in which
part with a copy of their franchise it is being run. Is it such a bad thing? I
agreement until they are fairly suggest not.
certain that the franchisee will be Most commercial enterprises would
proceeding. So far so good. prefer not to air any grievances they
However, what we are concerned may have with their trading partners in
with here is a trend we see emerging public and franchisors are no exception.
of a different kind of non-disclosure In particular, in my experience, the
provision in a franchise agreement, in motives behind such a disclosure by
addition to those referred to above. a franchisee are usually tainted with
This seeks to restrict the franchisee malice and seldom used as a legitimate
from discussing/disclosing to a third means of resolving grievances. More
party generally anything about their often than not it is used by franchisees
business or the franchise which is as a threat to bring the franchisor to
June 2008
www.businessfranchise.com
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