Preface

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PREFACE

This revised Handbook is intended to provide an updated resource,

addressed to the non-specialist commercial practitioner, that identifies

not only the pertinent legal issues but also useful strategies for protecting

the important interests at stake when a franchise or dealership is

terminated under less than amicable circumstances. The ABA Section of

Antitrust Law’s Distribution and Franchising Committee keeps a keen

eye on the law governing terminations—what restrictions exist, the

processes, and their economic effects. A Handbook to address the “how-

to’s” of termination became a logical outgrowth of that interest.

Chapter I begins by discussing the issues at stake in the termination

of a franchise or dealership and defines important terms and concepts

that relate to the termination process. Chapter II considers the steps that

franchisors and franchisees can and should take to prepare for a possible

termination of the relationship. Chapter III examines the contractual and

statutory limitations that may apply to both the process and the

justification for termination. Chapter IV explores alternatives to

termination of an unhappy franchise relationship, including nonrenewal,

a buyout, or the exercise of rights under ancillary agreements, such as

real estate leases.

Chapter V moves on to identify and summarize common litigation

issues that arise in terminations, including choice of forum, removal,

choice of law, and the availability of preliminary injunctive relief and

other remedies. Following this discussion, Chapter VI considers

alternatives to litigation, specifically the possibility or obligation to

engage in mediation and/or arbitration. Chapter VII next addresses a

variety of “adjunct” claims and defenses that may be asserted in a

termination dispute, including fraud, negligent misrepresentation,

tortious interference, violation of federal or state RICO provisions, state

unfair and deceptive trade practice acts, breach of implied covenants of

good faith and fair dealing, breach of fiduciary duty, and discrimination

claims.

Chapter VIII turns to an examination of the myriad antitrust claims

that may arise in a termination dispute. Chapter IX addresses trademark