Franchises are critically important arrangements for the distribution of goods and services in the US. It has been estimated that a third of all retail sales occur through franchising. Franchising is a cooperative arrangement, in which the franchisor and the franchisee are both investors. The franchiser contributes its name, expertise, and resources. But franchisee adds its own investment, gains its own ownership and vitally interested in the success of the venture. Chapter II introduces generally the chief elements of a franchise relationship, and special problems and alternative solution concerning franchise cancellation situations. In a franchise relationship, the franchisor acts as the brains of a system and the franchisee as an executor of the business idea developed by the franchisor. Three methods of protecting a franchisee in cancellation situations are examined in detail in the thesis: the duty to act in good faith, the doctrine of unconscionability, and good cause legislation. Chapter III, IV and V scrutinize in detail the effectiveness of all the three methods. The biggest disadvantage of the duty to perform in good faith has been its inability of this duty is not to overrule even unfair contract provisions, but to ensure that the mind of the acting party is consistently worth the intention of the contract provision according to which the party is fulfilling its duty or using its right. Chapter VI assembles the results of the thesis and comes to the conclusion that none of the examined methods is thoroughly satisfying. While good cause legislation meets franchisees' needs most effectively, attention should also be paid to franchisors’ needs to terminate also for reasonable economic reasons.
Huovinen, Mirja, "Controlling the franchiser's right to cancel the franchise relationship: fairness as an underlying principle" (1993). LLM Theses and Essays. 294.