"They're using their agreement to legally defend "unethical" and "bad business"" practices on its franchisees - that's the best argument yet showing the need for the standards of conduct contained in HR 3308, the Small Business Franchise Act."
AFA’s Blast Fax
May 1, 2000
Just when we thought we heard everything…
Franchisor admits that encroachment Is ""Bad Business"" … but claims that the franchise agreement permits bad business practices.
Admitting that it was "bad business" to encroach upon a franchisee's territory, Interim Healthcare, Inc. ("Interim") argued in the U.S. Court of Appeals in Chicago that it enjoys a contractual right to encroach so long as its company owned offices are located outside the franchisee's territory. Interim, the franchisor of a national home health care network, provides each franchisee with a defined territory, and claims that it strives to respect the franchisee's territory whenever possible. However, Interim denied contractual liability for encroachment, arguing that its franchise agreement permits it to encroach even though encroachment is a bad practice that it supposedly strives to avoid.
AFA Affiliate Member Carmen D. Caruso, the franchisee's lawyer, argued that the franchisee's territory is protected by the franchise agreement, because an alleged right to encroach was not included within the franchisor's "reservation of rights" regarding the defined territory. Caruso cited admissions by Interim that in drafting its franchise agreement, Interim was intentionally vague on territorial issues because it sought to avoid "rigid rules" that might straightjacket the system. Caruso argued that the implied covenant of good faith and fair dealing prevented Interim from taking opportunistic advantage of a deliberately vague agreement by encroaching in a way that even an Interim vice-president labeled "unethical" in his pre-trial deposition.
AFA's President, Susan P. Kezios and Director of Public Policy, Samuel Crawford, attended the appellate argument. They couldn't decide whether they were more startled by Interim's admission that encroachment is bad business, or by its argument that the franchise agreement permits bad business practices. "They're using their agreement to legally defend "unethical" and "bad business" practices on its franchisees - that's the best argument yet showing the need for the standards of conduct contained in HR 3308, the Small Business Franchise Act," Samuel stated.
Special Note: Carmen Caruso will join AFA Affiliate Member attorneys Michael Liss and Jeffrey Goldstein to discuss ambiguous franchise agreements at AFA's Franchisee Leadership Conference in
Coeur d' Alene, Idaho, May 4-5th.
Brought to you by WikidFranchise.org
Risks: Encroachment (too many outlets in area), Susan Kezios, American Franchisee Association, AFA, Termination, single, Gouging on supplies, Bad faith and unfair dealings, Canada, 20000501 Just when
