Entrepreneurs go through many regulatory hoops when entering the business world, especially when purchasing a franchise. After completing the initial setup, the stress doesn’t stop there. Franchisees may encounter various ongoing issues.
When business deals go south, franchisees might need legal help or government support. But what if their contract says they can’t ask for help or report a problem with their franchisor? This is where retaliation clauses cause trouble.
What are retaliation clauses and how do they violate the law?
Retaliation clauses are rules in franchise contracts. These clauses often include:
- No bad-mouthing the company
- Keeping information secret
- Other rules that limit what franchisees can say
For franchise owners, these rules serve various purposes:
- Protect their reputation
- Keep control of the business
- Limit legal risks
- Stop franchisees from speaking up
These clauses can limit franchisees’ rights and ability to address issues. That’s why they’re illegal under federal law, according to the Federal Trade Commission (FTC).
What to do about retaliation clauses
If you’re a Florida franchisee, these protections apply no matter what your contract says. The Florida Deceptive and Unfair Trade Practices Act further reinforces these protections at the state level. Even if you’ve already signed the agreement, you retain the right to report unfair practices without fear of retaliation.
If you see a retaliation clause in your contract or receive threats for reporting issues, get legal help. As a franchise business owner, an experienced legal professional can guide you through addressing these issues and protecting your entrepreneurial journey.
