Michigan franchisees have protections that go beyond those offered in most other states. The Michigan Franchise Investment Law limits what franchisors can do, and understanding those limits can change how a franchisee approaches a dispute long before it reaches a courtroom.
Many franchisees only learn about these protections after a termination notice or a disputed renewal has already landed on their desk. By then, their options may already be narrower than they would have been earlier in the relationship. At August Law, our franchise law attorneys counsel clients on their rights under the law and discuss options for dealing with franchise disputes.
The Michigan Franchise Investment Law at a Glance
The Michigan Franchise Investment Law (MCL § 445.1527) regulates the sale and ongoing relationship between franchisors and franchisees doing business in Michigan. Unlike states that leave the franchise relationship almost entirely to the written agreement, Michigan’s statute overrides certain one-sided contract terms regardless of what the franchisee signed. A franchisor cannot condition a franchise agreement on the franchisee’s waiver of rights granted under this law, and any such waiver is generally void.
Protections Against Unfair Termination and Non-Renewal
One of the statute’s most significant protections addresses how and when a franchisor can end the relationship. A franchisor generally cannot terminate a franchise before the end of its term without good cause and reasonable notice (MCL § 445.1527(c)). The law also restricts non-renewal: a franchisor that declines to renew must either offer the franchisee fair compensation for repurchase of the franchise or extend terms comparable to those offered to similarly situated franchisees in the system (MCL § 445.1527(d)). These protections matter because a termination or non-renewal can otherwise strip a franchisee of years of investment with little recourse.
Restrictions on Where Disputes Can Be Resolved
Michigan law also prohibits franchisors from requiring litigation or arbitration outside Michigan (MCL § 445.1527(f)). Many national franchise agreements are drafted with a home-state forum in mind, which can force a Michigan franchisee to litigate disputes hundreds or thousands of miles away, at significant added expense. This provision keeps disputes involving Michigan franchisees closer to home, which affects both the cost and practical difficulty of pursuing or defending a claim.
Remedies Available to Michigan Franchisees
A franchisee who can demonstrate a violation of the Michigan Franchise Investment Law may recover actual damages, reasonable attorney fees, and costs incurred in bringing the claim. This remedy structure matters because it can make pursuing a claim economically viable even when direct damages are modest relative to litigation costs.
Knowing Where You Stand
Because this statute departs from what many franchise agreements assume about termination, forum, and waiver, franchisees are often surprised to learn that a provision in their agreement may not be fully enforceable in Michigan. Recognizing which protections apply to your franchise is the first step in evaluating any dispute.
If you have questions about your rights as a Michigan franchisee, August Law can review your agreement and explain how this law applies to your situation. Contact our team to discuss your options.