Franchisees Lose Part of Their Independence

"In this New York Times article, the author explores a franchisor's right to control franchisee operations and product purchases.

Presently, 7-Eleven is battling a lawsuit with its franchisees in California over changes made to their franchise agreements that allow 7-Eleven to select 85% of the franchisees' product mix and designate suppliers for those products. Franchisees argue in the lawsuit that the franchise agreement change will negatively affect their profit margins by robbing them of the chance to bargain shop and negotiate. Little Caesars faces a similar argument from a group of franchisees it sued last year for offering unapproved product at their locations.

Although franchisors claim that they are able to maintain quality control and negotiate better bulk prices through approved distributors, franchisees remain skeptical of the benefits of franchisor purchasing decisions. "

Reprinted from Wiggin and Dana's Franchise Law Blog: Approved Product Skirmishes.