Franchise litigation rarely starts on equal footing. Franchisors typically draft the agreement, choose the forum, and have handled dozens of similar disputes. Franchisees are often facing their first legal fight over the business they built. At August Law, our franchise law attorneys represent both franchisors and franchisees in Michigan, and we have seen how the balance of power shifts depending on which state’s law applies and how the agreement is drafted.
Why the Playing Field Isn’t Level to Start
Franchise agreements are almost always drafted by the franchisor’s legal team, long before a franchisee ever signs. That means the franchisor typically controls the choice-of-law provision, the venue for disputes, and whether claims must go to arbitration. Franchisees, by contrast, are usually presented with a lengthy agreement on a take-it-or-leave-it basis. This imbalance is one reason state legislatures have stepped in to regulate the franchise relationship, though not every state has done so the same way.
Michigan Law Shifts Some Leverage Back to Franchisees
Michigan is different from most states because of the Michigan Franchise Investment Law (MCL § 445.1527). This statute prohibits a franchisor from requiring arbitration or litigation outside Michigan, terminating a franchise without good cause, or refusing to renew without offering fair compensation or comparable terms.
Our attorneys frequently point to these provisions when a franchisor’s litigation strategy depends on forcing a Michigan franchisee to fight a case far from home. A franchisee who proves a violation may also recover actual damages, attorney fees, and costs, which changes the economics of pursuing a claim.
Other States Leave More to the Contract Itself
States like Florida, for example, have no comparable franchise relationship statute. Instead, franchisees rely primarily on the federal FTC Franchise Rule’s disclosure requirements, ordinary contract law, and state law, which allows a civil claim when a franchisor misrepresents the investment required, the likelihood of success, or its plans to oversaturate a market. Outside of that narrow statute, the franchise agreement’s own terms, including forum-selection and termination clauses, generally control. This makes contract language even more consequential in Florida litigation than in Michigan.
Litigation Advantages Each Side Brings to the Table
Franchisors often have deeper resources, standardized playbooks for common disputes, and system-wide data that can support their position on damages or performance issues. Franchisees, meanwhile, may have stronger arguments around reliance on disclosure documents, verbal representations made during the sales process, or a pattern of similar complaints from other franchisees in the system. Which side has the practical upper hand often depends less on who has more money and more on who prepared for the dispute earlier and understood the applicable statute before signing.
What if You’re Headed to Court?
Whether you are a franchisor enforcing your agreement or a franchisee pushing back against a termination, the outcome of franchise litigation often turns on details established well before a complaint is filed: where the agreement says disputes must be resolved, what the disclosure documents actually said, and whether the statutory protections in Michigan apply to your situation.
Our firm has represented parties on both sides of these disputes, which gives us insight into how the other side is likely to approach the case. If you are facing a franchise dispute in Michigan, August Law can review your agreement and help you understand your position. We also have an office in Florida. Contact us to discuss your situation with our team.