FRANCHISEE 101: Real Estate Amendment is Non-Interpretative | Levitt Hackman



The franchisee is suing the Century 21 real estate franchisor to declare whether the franchisee can terminate the franchise agreement early, despite a clause revoking the franchisee’s early termination right. Noting that the claim raised “a direct question of the interpretation of the contract,” the court granted the franchisor’s request for rejection, finding the provision “exactly what it says.”

The franchisee and the franchisor entered into a franchise agreement in 2011, which provided the franchisee with a “one-time right to terminate the agreement”. The termination date was to be the 10th anniversary of the opening, provided that the franchisee made payment with notice of termination “any and all amounts not previously paid and / or forgiven on existing bills.”

In 2014, the franchisee and franchisor amended an amendment that removed any termination right granted to the franchisee under the franchise agreement due to “retirement, death, disability or any reason,” and replaced that right with a new provision allowing early termination only if there is a majority of the deductible. the owner dies or becomes disabled. The franchisee claimed that this amendment was added by the franchisor simply to update its standard franchise agreement.

The franchisee argued that the amendment did not remove the original termination wording because “any reason” should be interpreted as limited to “retirement, death or disability,” and the use of “any reason” is ambiguous, denying termination in pleadings. scene.

The court easily rejected the franchisee’s argument about the ambiguity of “any reason” and agreed with the franchisor that “any reason” has a “direct definition”: “reason” is an explanation, justification, motive or reason; and “any” means “everyone,” “all,” or “one or the other.”

The Court was not convinced that “any reason” should be read in conjunction with “retirement, death or disability”. Rather, he found that “any cause” should be given a meaning independent of other terms, otherwise “any cause” would be superfluous.

The court noted that the franchisee was aware of the original language of the franchise agreement when the franchisee agreed to revoke the right of termination, establishing the clear intent of the parties.

Franchisees should study and understand all proposed changes to the franchise agreement requested by the franchisor prior to signing it, even if the changes seem to be “template”.

Changes are often significant and can have serious consequences for the previous rights of the franchisee. A franchise lawyer can advise and advise on any changes proposed by the franchisor to help the franchisee understand and protect their rights.

Everest Realty Group vs. Century 21 Real Estate, # 2: 21-cv-00150-TC-DAO, 2021 WL 2592848 (D. Utah, June 24, 2021)


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