Area Developers occupy a potentially lucrative niche in the franchising world, but they face the challenge of being in the middle, with the franchisor on one side, and franchisees on the other.
Area Developers must be on guard against outliving their usefulness. The benefits to a franchisor from the area developer are front-loaded as the market is developed. Once the market is developed the franchisor may have less desire to continue the relationship.
- Carmen D. Caruso has counselled many area developers in the negotiation or renewal of their agreements and in the resolution of disputes arising from factors such as failing to meet development schedules.
- For nearly seven years we represented the Chicago region Area Developer of a well-known restaurant brand, and years he successfully rebuffed a variety of default threats by the franchisor, without litigation, while also resolving grievances by local franchisees. Recently the franchisor sued seeking to terminate the Area Developer for alleged fraud in the franchise sales process, and on behalf of the Area Developer we counterclaimed for breaches by franchisor causing substantial brand damage. The case was favorably settled with a buy-out by the franchisor of the Area Development Agreement.