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Can My Franchisor Make Me Participate in Groupon?

A recent client came to me with the issue that their Franchisor is "forcing them" to participate in a network wide Groupon ad, which will in effect cost my client $5000 in lost revenue, and in which she absolutely does not want to participate. Further, the Franchisor claims he (the CEO) can sign for my client if she refuses to sign. She (and many of the other franchisees) are up in arms about this. After reviewing her Franchise agreement and the Franchise Disclosure Document, I confirmed that there is nothing in either document which states this obligation. The Franchisor's position is that this is "marketing method" that they have every right to require. Not so fast. Contractual obligations must be in the contract I.e. the franchise agreement, or at a minimum disclosed in the Franchise Disclosure document as being something the franchisor may require. Furthermore, signing the franchisee's name to something which the franchisee is (allegedly) required to sign, must also be authorized in the franchise agreement. In this situation the franchisor is way out of line in both its position and its claim for authority to sign on behalf of the franchisee. Unless there is a specified contractual obligation, any discounted programs or promotions in a franchise system MUST be optional and for "participating locations only." Franchisees may not be "forced" to participate in a discount or promotional program without their agreement, or if part of a cooperative advertising group, in accordance with the rules of that cooperative. And the Franchisor simply can NOT sign a franchisees name to something, without an express power of attorney or other authorization. Do not be intimidated by a franchisor's insistence they are correct. Seek counsel from an experienced franchise attorney to determine your rights.

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