A breach of a Michigan franchise agreement can put revenue, operations, and years of investment at risk. August Law, PLLC represents franchisors and franchisees in franchise disputes involving contract breaches, disclosure issues, termination, and other commercial claims.
The right response depends on the agreement, the type of breach, the available evidence, and whether Michigan’s Franchise Investment Law applies to the disputed provision.
Common Breaches of Michigan Franchise Agreements
Either side can breach a franchise agreement. Common disputes involve:
- Unpaid royalties or advertising fund fees
- Territorial encroachment or competing locations
- Promised training, support, or supply obligations
- Unauthorized use of trademarks or confidential information
- Disclosure violations discovered after the agreement was signed
A disclosure violation can support a statutory claim separate from a contract claim, with its own elements and deadlines.
Legal Options Short of Ending the Franchise
Termination is not the only response to a breach. Depending on the agreement and the harm involved, a party can pursue:
- Money damages for losses caused by the breach
- Injunctive relief to stop ongoing conduct, such as trademark misuse or disclosure of trade secrets
- Enforcement of a valid liquidated-damages provision
- Negotiated amendments, payment plans, or an agreed exit
Michigan generally treats punitive damages as unavailable for an ordinary breach-of-contract claim. Lost profits, contractual fee provisions, and other compensatory damages can therefore become central to the case’s value.
Michigan Termination Clauses Must Account for Good Cause and Cure Rights
MCL 445.1527 makes certain franchise provisions void and unenforceable. A clause that allows a franchisor to terminate before the end of the term without good cause is void. Good cause includes a franchisee’s failure to comply with a lawful agreement provision after written notice and a reasonable opportunity to cure; the statute states that the cure period need not exceed 30 days.
The contract can add its own notice or cure requirements. A franchisor that skips contractual steps can weaken a termination position even when a genuine breach occurred.
Michigan Forum Clauses and Franchise Disputes
The same statute voids provisions requiring arbitration or litigation outside Michigan, although federal arbitration law can affect whether an out-of-state arbitration requirement is enforceable in a particular dispute. Forum questions should be evaluated before filing or responding to a case.
Post-Termination Obligations Can Continue
After a valid termination, the parties can still dispute non-compete restrictions, confidentiality, de-branding, inventory, equipment, payment obligations, and other contract terms. Michigan law also restricts certain nonrenewal provisions and addresses compensation for specified franchise property in qualifying circumstances.
Review Your Franchise Agreement Before Responding to a Breach
Before sending a default notice, answering one, or terminating the relationship, have the agreement and relevant communications reviewed together. Early analysis can preserve leverage and reduce avoidable mistakes.
Call August Law at 248-833-6225 or contact us online to discuss a Michigan franchise agreement dispute.