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Beware of the Boilerplate Introduction

By Genevieve A. Beck
February 01, 2004

Many franchise agreements begin with an introductory paragraph, a “witnesseth” statement or various recitals that tout the virtues of the franchisor's business or systems. These introductory statements might state that the franchisor has “developed a proven system,” “developed and perfected a system,” or “developed a uniform system” for operating a particular type of business. The introductory statements also might highlight the success, reputation, or positive image of the franchisor's business systems.

But beware: Although these statements are not intended by the franchisor to have any binding legal consequences, a franchisee may seize upon this language if his or her business is less successful than he or she had hoped, or if a conflict develops between the parties. More than one franchisee has asked a court or an arbitrator to rule that, by including such statements in the prefatory paragraphs of its franchise agreement, the franchisor has created an enforceable legal obligation to ensure the overall success of the franchisee's business.

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