Location, Location, Litigation: Post-Termination Non-Competes, De-Branding, And The Premises Problem In Canadian Franchise Law

When a franchise relationship ends badly, the story rarely ends at termination. In a growing number of Canadian disputes, the real battle begins the day after: the former franchisee strips the signs, changes the name, and keeps right on serving the same customers from the same location. The franchisor, watching its goodwill walk out the door without it, rushes to court. And more often than franchisors would like, the outcome is uncertain.

This article surveys the current state of Canadian case law on the enforcement of post-termination non-competition covenants in the de-branding context – where a franchisee terminates or is terminated, re-identifies the premises under a new name, transfers the lease, and continues operating a competing business from the same location. It examines the two distinct camps into which recent decisions fall, identifies the common threads running through each, and then turns to the practical question franchisors should be asking themselves before the relationship deteriorates: have we structured our real estate arrangements to reduce our dependence on these covenants in the first place?

The Legal Framework: Non-Competes in Franchising

Post-termination non-competition covenants are a standard feature of Canadian franchise agreements. They typically prohibit a former franchisee from operating a business that is similar to, or competitive with, the franchised business within a defined radius of the franchised location for a period following termination – commonly one to two years.

Under Canadian common law, restrictive covenants are in restraint of trade and presumptively unenforceable unless the party seeking enforcement can demonstrate that the clause is reasonable in scope, duration, and geographic reach, and that it goes no further than is reasonably necessary to protect a legitimate proprietary interest. The Supreme Court of Canada in Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, confirmed that courts will not rewrite unreasonable restrictive covenants to save them – the doctrine of notional severance applies only in limited circumstances.

In the franchise context, courts recognize that franchisors have a legitimate interest in protecting the goodwill, brand recognition, and customer base that they have developed and conveyed, in part, through the franchise relationship. This justifies some degree of post-termination restraint. But as the cases below demonstrate, the gap between a legally valid covenant and a judicially enforced injunction can be wide indeed.

When a franchisor seeks to enforce a non-compete covenant through interlocutory injunction – the usual first step in a de-branding dispute – it must satisfy the three-part test from RJR-MacDonald Inc. v. Canada,1994CanLII 117 (SCC): (i) a serious issue to be tried (including, in practice, a strong prima facie case that the covenant is enforceable); (ii) irreparable harm if injunctive relief is not granted; and (iii) balance of convenience favouring the granting of the injunction. It is at this stage that the inconsistency in the case law is most pronounced.

Two Camps: A Survey of Recent Canadian Decisions

A review of the post-termination non-compete jurisprudence from approximately 2016 to 2025 – spanning Alberta, British Columbia, Ontario, Saskatchewan, and New Brunswick – reveals a body of case law that is, frankly, difficult to reconcile. Cases with seemingly similar fact patterns have produced opposite outcomes. Two broad camps emerge: those in which franchisors succeeded in obtaining enforcement or injunctive relief, and those in which they did not.

Camp One: The Franchisor Prevails

Garcha Bros. Meat Shop Ltd. v. Singh., 2022 BCCA 36 (and subsequent contempt proceedings, Garcha Bros. Meat Shop Ltd. v. SJP Enterprises Ltd., 2022 BCSC 2009) [Garcha Bros.]

The leading appellate decision on this issue remains Garcha Bros., where the British Columbia Court of Appeal upheld an injunction against a former franchisee and related parties who, following termination, assigned the franchise lease to a newly incorporated company and continued operating a retail butcher shop from the same premises – selling essentially identical products to the same customer base.

The Court upheld the chambers judge’s finding that there was a strong prima facie case: the non-compete was unambiguous in its application to the business being operated from the franchised location, the geographic scope was reasonable given that the franchise location was the only one within the 10-kilometre radius, and the corporate veil was lifted given clear evidence of collusion between the principals of the former franchisee and the newly incorporated entity designed to circumvent the covenant.

In a notable sequel, the BC Supreme Court found the defendants in contempt of court after they continued operating in breach of the injunction, issuing fines and threatening escalating sanctions. The Court made clear that courts will enforce injunctions against both contracting parties and non-parties who are shown to have conspired to defeat a franchise system’s post-term obligations.

The common threads in Garcha Bros. that supported the franchisor: a well-drafted, clearly scoped covenant; a continuing, identical business from the same premises; no gap in the geographic reach of the restriction; and unmistakable collusion designed to avoid the covenant’s application.

Instant Imprints Canada Inc. v. 738806 NB Inc., 2025 NBKB 261

This 2025 New Brunswick decision tracks Garcha Bros. closely in both structure and outcome. The Instant Imprints franchisee fell into arrears, vacated the Moncton franchise premises, and within days, a new company – Elevate Promo & Apparel Inc. – began operating the same business from the same address. Elevate was incorporated by the franchisee’s spouse. It used the same phone number, the same Facebook page, and the same equipment as the former franchise. The franchisee himself continued to assist with operations. The court granted a full interlocutory injunction against the franchisee, his spouse, and the new company.

Three aspects of the decision merit attention. First, following Garcha Bros., the court extended the injunction to the non-party spouse and her company on the basis that they had knowingly coordinated with the franchisee to circumvent the post-termination covenants.

Second, the court squarely distinguished Chatters Limited Partnership v. Chatters Deerfoot Meadows Limited, 2025 ABKB 536[Chatters], a case that is discussed in greater detail below, on the “no legitimate interest to protect” issue: unlike in Chatters (where the franchisor had no active presence in the territory), there was no evidence here that Instant Imprints had abandoned the Moncton market; and as the court observed, no replacement franchisee would enter the territory while Elevate was permitted to operate in breach of the covenants. Third, and notably for practitioners, the court treated the franchisee’s demonstrated impecuniosity – his clear inability to satisfy any eventual damages award – as a factor supporting the finding of irreparable harm. The practical impossibility of collecting judgment is a relevant, though not determinative, consideration that franchisors should document.

Keller Williams Realty v. VIP Realty Inc., 2025 ONSC 7152

In this 2025 Ontario decision, two Keller Williams real estate franchisees – operating major brokerages in Ottawa and Mississauga – rebranded their operations and moved hundreds of agents to a competing national franchisor (Royal LePage) while still under their Keller Williams licence agreements. The franchisor sought a mandatory injunction requiring the franchisees to cease operating under the competing banner. The Ontario Superior Court of Justice granted the injunction.

Two features of this decision are particularly useful for the survey. First, because the relief sought required the franchisees to actively cease their competing operations rather than merely refrain from future conduct, the court applied the heightened “strong prima facie case” standard at the first branch of the RJR-MacDonald test – the same elevated threshold applicable where the injunction is “mandatory” rather than “prohibitive” in character. Franchisors should be aware that this higher standard will be engaged whenever the practical effect of the injunction is to compel affirmative steps by the former franchisee, such as closing an operating business. Second, the court articulated what may be the clearest judicial statement in recent Canadian franchise jurisprudence of the system-wide contagion rationale for irreparable harm: if an injunction were denied, other franchisees across the system would learn that the restrictive covenants in their licence agreements – which bind and protect them alike – had little practical value. That systemic erosion of confidence is not susceptible of monetary quantification, and the court found it constituted irreparable harm. The franchisees’ argument that the franchisor came to court with unclean hands was dismissed; the court found no misconduct on Keller Williams’ part sufficient to invoke the doctrine.

Camp Two: The Franchisor Falls Short

MEDIchair LP v. DME Medequip Inc., 2016 ONCA 168 [MEDIchair]

Turning now to decisions favoring franchisees, MEDIchair squarely highlights the importance of having a legitimate or proprietary interest to protect within the range of the non-compete covenant. MEDIchair’s appeal focuses solely on this issue, overturning the lower court’s order to the former franchisee to cease operations on the basis of a lack of proprietary interest. Here, is also notable that the court ordered the former franchisee to cease operations as opposed to issuing an injunction.

In the case’s initial hearing, the application judge ordered the former MEDIchair franchisee to cease operations, which they had continued from the same business in Peterborough, Ontario with the same merchandise, employees, and suppliers following the end of the franchise agreement. On appeal, however, the court set aside this order, citing the lack of legitimate or proprietary interests to protect within the thirty-mile scope of the covenant.

The appellate court called attention to statements from cross-examination, which showed that there was a deliberate decision by MEDIchair’s parent company to not open a new MEDIchair store in Peterborough given the parent company’s competing business interests. At the time of litigation, MEDIchair’s parent company owned both MEDIchair and another franchise concept that was in competition with MEDIchair. Evidence produced during the hearing indicated that the parent company had no intention of opening another MEDIchair store in Peterborough as it would operate within the radius of conflict with a store from the competing franchise.

The decision favours franchisees insofar as the franchisor’s failure to lead evidence demonstrating that it was still active in the market, or intended to be active in the market, may be persuasive when the court considers whether the franchisor has an economic interest to be protected.

Chatters Limited Partnership v. Chatters Deerfoot Meadows Limited, 2025 ABKB 536 [Chatters]

In this 2025 Alberta decision, the Chatters hair salon franchisor sought to enjoin its former franchisee from operating a new, independent salon in the same area. The franchise agreement contained a two-year, ten-mile radius non-compete. The court accepted that the new salon was “similar” to the former franchise. Nonetheless, the injunction was dismissed.

Three factors proved fatal to the franchisor’s application. First, there was no longer any Chatters salon operating in the restricted area – the relevant location had itself closed – meaning the franchisor had no current brand presence to protect. The court found that a speculative interest in potentially re-entering the market was not a sufficient proprietary or legitimate interest to anchor the injunction. Second, the geographic scope of the restriction – ten miles, where the average distance between Chatters’ locations in Calgary was only three miles – was overbroad. Third, the court found insufficient evidence of irreparable harm: lost profits were calculable, and there was no demonstrated risk of trademark damage or reputational harm that money could not cure.

Chatters, building on MEDIchair, is a cautionary tale for franchisors who fail to maintain a brand presence in the territory they seek to protect, or who draft geographic restrictions without reference to the actual footprint of their system.

RFSP Equipment Ltd. v. Singh, 2022 BCSC 538 [Freshslice]

Of all the cases in this survey, Freshslice may be the most instructive – and the most troubling for franchisors – precisely because the franchisor won the legal argument and still lost the motion. The Freshslice franchisor brought two applications to enjoin former franchisees who had rebranded nine pizza restaurants, operating across Vancouver, as “HellCrust Pizza” and “Yummy Slice Pizza” following an acrimonious breakdown of their franchise relationships.

The court found in Freshslice’s favour on virtually every contractual and legal issue. The non-competition clauses were held to be valid and enforceable (with the exception of an unreasonable 100-kilometre radius for one location, which the court severed). The franchisees’ argument that the covenants were unenforceable for ambiguity was rejected. Their rescission claims were found to be out of time. Their allegation that Freshslice had repudiated the franchise agreements was unsupported by the evidence. The court concluded that Freshslice had established a strong prima facie case that the former franchisees were in breach of their non-competition obligations.

The injunctions were nonetheless dismissed for want of irreparable harm. The franchisees had executed a thorough de-identification: all Freshslice marks, dough, telephone numbers, social media accounts, and point-of-sale systems had been removed; new menus, new suppliers, and new branding were in place. The court found that because the rebranding was so complete, there was no realistic risk of customer confusion, no evidence of ongoing use of confidential information, and no demonstrated harm to the Freshslice brand or goodwill. Whatever financial loss Freshslice may have suffered was, in the court’s view, calculable and compensable in damages. On the balance of convenience, the court noted that granting the injunction would have the practical effect of shutting down the former franchisees’ businesses entirely, with attendant losses for employees and investors.

The case introduces a deeply counterintuitive dynamic into the de-branding enforcement landscape. In Garcha Bros., the franchisor succeeded in part because the competing business continued to operate in a manner that closely resembled the franchise – same products, same location, same customer base, with the clear inference of goodwill appropriation. In Freshslice, the franchisees defeated the injunction precisely because they had de-branded so thoroughly. Both decisions are from British Columbia. Both were released in 2022. Both involve de-branding from a former franchise location. They reached opposite results. The lesson the case law inadvertently teaches is that a sufficiently determined franchisee, willing to invest in a complete and credible rebrand, may be better positioned to resist injunctive enforcement than one who half-heartedly pulls a few signs. The franchisor’s remedy, in that scenario, is preserved – it may still pursue damages at trial – but the interim relief that prevents the competing business from operating is unavailable. For franchisors, this is cold comfort.

Lightbox Enterprises v. 2708227 Ontario Inc., 2022 ONSC 1873

In this Ontario case involving the “Dutch Love” cannabis retail brand, the licensor sought to enjoin its former licensee from operating the rebranded “Roll N Rock Cannabis” stores after the termination of their licensing arrangement. The court declined to grant the injunction, underscoring that the right to enforce a restrictive covenant is never automatic – evidence must be marshalled carefully, the nature of the parties’ relationship must be clearly established, and the harm must be demonstrably irreparable.

While this case arose under a licensing arrangement rather than a traditional franchise agreement, it resonates strongly with the broader franchisor experience: the de-branding scenario – remove the name, keep the business, stay in the same location – does not guarantee injunctive relief.

Greco Franchising Inc. v. Franco Milito et al., 2021 ONSC 3950

This Ontario decision arose from a COVID-era dispute in which a fitness studio franchisee de-branded and began operating as “TG Athletics” from the original franchised location. The court dismissed the franchisor’s injunction application, finding that the franchisor’s own conduct – including unilateral changes to the franchise system and obligations – raised serious questions about whether the termination had been proper and whether the franchisee’s actions amounted to a legitimate response to a fundamental breach.

The court’s analysis made clear that the question of whether the franchisor had itself breached the franchise agreement – including the duty of good faith and fair dealing – was a live issue at the injunction stage, and that a franchisor with unclean hands faces a steeply uphill path to interim relief.

Turtle v. Valvoline Canadian Franchising Corp., 2021 SKCA 76

This Saskatchewan Court of Appeal decision adds a dimension to the survey that none of the other cases address directly: the personal covenant drafting problem. Valvoline’s predecessor had franchised two oil-change locations, one Nelson Road location and one Warman location, to Sneer Enterprises Ltd., “Sneer.” When the Nelson Road franchise agreement expired, the business was transferred to a new company – Dad’s Oil Change Limited – incorporated by Kara Turtle, who was Sneer’s sole director and officer. The franchisor sought to enjoin both Sneer and Ms. Turtle personally from operating the competing business, relying on the in-term non-competition covenant in the still-active Warman franchise agreement.

The Court of Appeal set aside the injunction. The key issue was whether Ms. Turtle was personally bound by the Warman franchise agreement. She had signed the agreement on behalf of Sneer only, was not named as a guarantor, and did not execute the agreement in her personal capacity. The court held that the chambers judge had erred by failing to give proper weight to the doctrine of independent corporate personality: the fact that Ms. Turtle was the sole directing mind of Sneer did not, without more, make her personally subject to the covenants that bound the corporation. The court acknowledged that Valvoline had arguments on the point but held that those arguments fell well short of the “strong prima facie case” standard required at the mandatory injunction stage.

The practical lesson is direct: where a franchisor wishes post-termination non-competes to bind individual principals personally – not just the corporate franchisee – those obligations must be stated explicitly in the body of the agreement, in a separately executed personal guarantee, or in a guarantee and indemnity appended to the franchise agreement. Owner-operator schedule language identifying a named individual as “bound by the covenants” of the agreement may not be sufficient if that individual signed only in a corporate capacity. Courts will not lightly elide the distinction between a corporation and the human beings behind it.

Kwik Kopy Printing Canada Corporation v. Pickard, 2016 ABQB 534 [Kwik Kopy]

The Alberta Queen’s Bench decision in Kwik Kopy does not turn on a deep point of non-compete law, but it earns a place in this survey as a cautionary lesson about the practical demands of the injunction application. The Pickard franchisees terminated their Edmonton printing franchise and began operating a competing print business from (or in connection with) the same location. The franchisor sought an interlocutory injunction on a rushed chambers application. The court adjourned the non-compete injunction to special chambers, finding the evidence of irreparable harm insufficient on the record then before it: the established breaches were modest, the reputational harm was a possibility rather than a demonstrated fact, and the balance of convenience did not favour extraordinary relief at that stage. The only mandatory relief granted was the narrow, conceded obligation to return six months of customer data.

The case is a reminder that urgency alone does not substitute for evidence. A franchisor that brings an injunction application without the time or resources to marshal a thorough evidentiary record – documenting actual harm, demonstrating a credible risk to brand reputation, and establishing that damages cannot repair the injury – may find itself in the uncomfortable position of having the application stood down for months while the competing business continues to operate.

Liberty Tax Service, Inc. v. Pinto, 2025 ONSC 2429

This 2025 Ontario decision is a brief but instructive entry in Camp Two, and a further illustration of the evidentiary burden the case law has come to impose. The Liberty Tax franchisor sought to enforce a two-year post-termination non-solicitation and non-competition covenant. The court found that the admissible evidence on the non-solicitation covenant was insufficient to satisfy the first branch of the RJR-MacDonald test. On the balance of convenience, the court placed particular weight on the potential adverse impact on the defendant’s clients if competition were enjoined and dismissed the motion. The case adds a client welfare dimension to the balance of convenience analysis that does not frequently surface in franchise injunction decisions and reinforces the recurring message from this body of law: a franchisor’s entitlement to enforce a facially valid covenant does not translate automatically into injunctive relief. The evidentiary record must demonstrate, concretely, that the remedy is warranted.

Common Threads: What the Cases Tell Us

Setting aside the fact-specific reasons for success or failure in each case, several patterns emerge from the case law as a whole.

Factors Favouring the Franchisor

• Clear collusion or bad faith by the franchisee. Cases like Garcha Bros. where the former franchisee engineered a corporate workaround to circumvent the covenant – shifting operations to a related party or family member – attract the court’s attention to the equities. Courts will lift the corporate veil and extend injunctions to non-parties when the evidence of collusion is compelling.
• Tight, well-drafted covenant language. Where the restriction clearly and specifically identifies the type of business prohibited, and the radius and duration are defensible in relation to the system’s actual footprint, courts have been more willing to find a strong prima facie case.
• A continuing and active franchisor brand presence in the territory. The strongest cases for the franchisor involve de-branding from a location that sits within a functioning, populated territory – where the customer confusion risk and the franchisee’s appropriation of built goodwill are manifest.
• Swift, decisive action. Franchisors that move quickly to document the breach and bring their injunction application promptly are better positioned to establish urgency and irreparable harm. Delay signals that the harm may not be so immediate after all.

Factors Favouring the Franchisee

• An absent or diminished brand presence. If the franchisor has no operating location in the restricted area, or if the system itself has contracted, courts will question what legitimate interest remains to be protected.
• Overbroad geographic or temporal scope. Courts applying the reasonableness standard are sensitive to restrictions that exceed what is necessary to protect the franchisor’s actual brand territory. As ‘Chatters’ illustrates, a radius drafted without regard to the real spacing of the franchise system is vulnerable.
• Franchisor misconduct or disputed termination. Where the validity of the termination is contested – particularly where the franchisor’s own conduct is alleged to have constituted a breach – the preliminary injunction test becomes considerably more difficult to satisfy. Courts are unwilling to grant extraordinary relief to a party whose own hands may not be clean.
• Quantifiable damages. Perhaps the most persistent obstacle for franchisors is the irreparable harm element. Where lost profits can be calculated with reasonable precision – based on the franchisee’s operating history, royalty streams, or territory data – courts have been reluctant to find that damages are truly inadequate. Franchisors must lead compelling evidence of harm to goodwill, brand integrity, or market position that cannot be captured in a monetary award.

The cumulative picture is one of genuine unpredictability. A franchisor facing a de-branding franchisee cannot reliably predict whether it will obtain injunctive relief, even where the covenant appears valid on its face and the breach is undeniable. The litigation is expensive, the outcome is uncertain, and even a successful injunction application may be followed by contempt proceedings if a determined former franchisee refuses to comply. This uncertainty has a chilling effect on franchisor enforcement decisions, and it invites the question of whether there is a better way.

The Better Question: Who Controls the Premises?

The title of this article is not merely a play on words. It reflects what may be the central strategic question in post-termination franchise enforcement: if you do not control the lease on the premises from which a former franchisee is operating, can you reliably control what happens at that location after the relationship ends?

The answer, drawn from the case law, is: not reliably enough. Franchisors who find themselves in litigation over de-branded competing locations are often doing so because the franchisee holds the lease directly with the landlord and, once the brand comes down, the franchisor’s only tool is the non-compete covenant – the very instrument whose enforceability the courts have treated inconsistently. The prudent franchisor invests in structural protections that reduce, or eliminate, the need to rely on that instrument.

The Head Lease / Sublease Model

The most direct means of real estate control available to a franchisor is for the franchisor (or an affiliate) to enter into the head lease directly with the landlord, and to sublease the premises to the franchisee. Under this arrangement, the franchisor retains a direct landlord-tenant relationship with the property owner. Upon termination of the franchise agreement, the sublease terminates, and the former franchisee has no right to remain in occupation. The franchisor can then move into the location itself, grant a new sublease to a replacement franchisee, or simply recover possession – without resort to a non-compete covenant at all.

This model is attractive to landlords (who want a creditworthy tenant on the hook) and to franchisors who hold the real estate as an asset in the system. As has been noted in the franchising literature, a franchisee is less likely to compete with the franchisor post-termination if it does not have the location anymore. The head lease model is precisely designed to achieve that result.

The tradeoffs are real, however. Holding head leases across a large system exposes the franchisor to significant cumulative lease liability, administrative burden, and insurance obligations. In jurisdictions with franchise disclosure legislation (such as Ontario’s Arthur Wishart Act, the British Columbia Franchises Act, and the other five provincial regimes), there are also disclosure implications if the franchisor acts as sublandlord, including the potential obligation to return rents paid by a rescinding franchisee under the head lease model, as the Ontario Superior Court addressed in Sirianni v. Country Style, 2012 ONSC 881. These are manageable considerations for a system that is disciplined about its real estate strategy, but they are not trivial.

Tripartite Agreements and Lease Rider Mechanisms

Where the franchisor does not hold the head lease, the next best structural tool is a well-crafted tripartite agreement (also sometimes referred to as a conditional assignment agreement, an option to assume lease, or a lease rider) entered into by the landlord, the franchisee, and the franchisor.

The purpose of this instrument is to create contractual privity between the franchisor and the landlord that does not otherwise exist when the franchisee is the direct tenant. Key provisions typically include:

• Option or right to assume the lease. The franchisor is granted an option, exercisable upon termination of the franchise agreement (or upon franchisee default), to step into the franchisee’s shoes as tenant or to designate a replacement franchisee to do so. This is sometimes structured as a conditional assignment of the lease in favour of the franchisor, triggered automatically upon franchise termination.
• Notice and cure rights. The landlord agrees to give the franchisor contemporaneous notice of any default by the franchisee under the lease, and the franchisor is given a cure period before the lease can be terminated. This ensures the franchisor can protect the location even in cases of franchisee financial distress.
• Use restriction. The lease and/or rider restricts the use of the premises to the operation of the specific franchise concept. Upon termination, the franchisee’s right to occupy the premises for the continued operation of a similar or competing business is extinguished as a matter of property law, not merely contract.
• No amendment without franchisor consent. The franchisor’s consent is required for any amendment to the lease, preventing the franchisee and landlord from negotiating away the protections the franchisor has bargained for.

The tripartite agreement is not a silver bullet – its effectiveness depends entirely on the franchisee’s (or franchisor’s) ability to negotiate it with the landlord at the outset of the lease, and not all landlords will accept all riders or riders in every market. Sophisticated institutional landlords, in particular, may resist provisions that complicate their tenant management rights or their ability to recover possession on default. But for franchisors who invest in negotiating these provisions, the practical effect - when the relationship ends - is that the former franchisee cannot simply stay put and compete. The keys to the kingdom lie with the landlord, not with the litigants.

Direct Lease Rights in the Franchise Agreement

Even without a standalone tripartite agreement, franchise agreements themselves can be drafted to include robust lease-related provisions. Requirements that the franchisee obtain the franchisor’s written approval of the lease and any amendments, mandatory lease assignment provisions triggered upon termination, and covenants that the franchisee will cooperate with any franchisor assumption of the lease upon default or termination all contribute to a stronger post-termination position.

Franchisors operating in multiple provinces should also be attentive to the interplay between these provisions and applicable landlord-tenant legislation, including provisions governing relief from forfeiture and assignment rights, which vary meaningfully across jurisdictions.

Conclusion

The post-termination non-compete covenant remains a critical tool in the franchisor’s legal arsenal – but the case law makes clear that it is a tool with limitations, and that its enforcement at the injunction stage is subject to a degree of judicial variability that should give any franchisor pause before banking on it as the primary line of defence.

The better-positioned franchisor is one that has structured its real estate arrangements so that the keys to the premises – literally – do not remain in the hands of a former franchisee who has decided to compete. Whether through the head lease / sublease model, a well-negotiated tripartite agreement, or robust lease assignment provisions embedded in the franchise agreement, franchisors have meaningful tools available to address the “who’s lease is it anyway” problem before it becomes a courthouse problem.

Reviewing the lease structure of your franchise system – particularly as agreements come up for renewal, new locations are added, or termination disputes begin to simmer – is among the most valuable risk-management exercises a franchise lawyer can recommend. The time to fix the lease problem is not the morning after the signs come down.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.