QLD Ending franchise agreement

[Cluelesslaw]

I want to end a tutoring franchise agreement but a clause in the agreement states that I can’t continue tutoring from the premis. The franchise agreement states that tutoring can only be done at the premis agreed by the franchisor. Is it possible to continue operation of a teaching based business if we change the model of operation to in onsite as well as mobile coaching? All the material owned by the franchisor would also be returned as we have already established our own programs. We have a current lease of 3 years on the premis and all our client are completely different to those that were given to us when we took over operation of the business

 

[Adam1user]

To be on the safe side, it is better to consult a lawyer whom is provided with the franchise agreement, asking this question on this forum may not provide you a suitable advice as no one seen the whole franchise agreement. There maybe clauses which affect the answer you did not provide here.

 

[Cluelesslaw]

There is a 12 mth restraint clause on the provision of any form or participation of tutoring services to be carried out by me anywhere. There are no other francisors or tutoring services in the area I’m currently practicing in. I wanted to gauge how strong a case I would have to proceed providing a tutoring service as it does not directly compete with the franchisor and there is no other service providers in the area. Based on the wording of the franchise agreement being “tutoring” could I still provide a service if I branded it “coaching” with a different delivery method and model to the franchise? The restraint doesn’t seem to protect the interest of the franchisor because I wouldn’t be reasonably competing with its business as there is no there franchise owners in the territory or interested in setting up a franchise in the territory. I could also argue that the service provided is also currently unique to the area and ceasing operation would not be in the best interest of the public. I just wanted to see if the clause would be reasonably enforceable before I persue legal action or am in the middle of a court order. The main drive for this question is I have a lease on the premis for anther 2 years so if I am unable to sublease or can’t continue operating my business I essentially have dead rent but don’t want to continue with the franchisor because the operation practices doesn’t align with where I want to take the business and the cost if continuing under the franchise agreement is a rip off.
Do I have reasonable ground to have this clause ruled as unenforceable?

 

[Rob Legat - SBPL]

Adam1user's comments are correct. You will need someone to review the franchise agreement.

That being said, here are some general purpose comments:
- Franchisors tend to act strongly to protect their brand and seek to enforce restraints. Those restraints also tend to get some more support from the law because of the franchise relationship.
- There may not be another tutor in the area, but the franchisor will have the ability to 'sell' the area - which puts you in competition.
- Call a new business what you like, if it overlaps into the franchised business then it is probably open to a claim.
- Public interest is a holistic thing. There's also public interest in holding people to the terms of the contracts they enter into, and supporting the rights of franchisors to protect their brands. That's not to say you may not have a point, but you'd be relying on a judge to agree with you.