We represented a large Canadian-based franchisor in restructuring 100s of franchised restaurants in several U.S. markets. The restructuring included the closure of multiple under-performing restaurants or the transfer of restaurants to stronger operators, which required working with both the franchisor and the affected franchisee in creating a mutually beneficial workout solution.
What We Did
Closing or terminating a franchise requires compliance with state franchise laws, including notice and cure rights and the obligation to deal in good faith. We worked with the franchisor’s management in identifying the under-performing restaurants, and creating a workable solution for each. We then prepared proper notices offering mutual termination and settlements of outstanding amounts owed, or in other cases, documented the transfer of the restaurants to stronger operators.
Terminating a franchisee is never easy. We get that. We therefore also prepared talking points for executives that they could use when they met with each affected franchisee.
The franchisor was able to close or transfer all affected restaurants in several U.S. markets, and effectively withdraw from certain markets, without any adversarial proceedings.