“We have never enforced that provision.”
It sounds reassuring. A prospective franchisee raises a concern about harsh language in the franchise agreement, and the franchisor responds that the provision has never been used. Perhaps the salesperson adds that the language is merely standard, the franchisor would only use it in an extreme situation, or a good franchisee has nothing to worry about.
The natural reaction is to move on.
But if the franchisor does not intend to enforce the provision, why is it in the agreement? And if a dispute develops years later, which will matter more: the reassuring conversation or the contract the franchisee signed?
Those questions do not necessarily mean the franchisor is acting in bad faith. They do mean the prospective franchisee should slow down, document what was said, and understand the difference between an assurance and a contractual protection.
The Future Royalties Example
In a recent franchise agreement review, we represented a prospective multi unit franchisee whose agreement contained a significant future damages provision. If the agreement were terminated early, the provision could allow the franchisor to seek royalties it expected to receive during the remaining term.
We recommended eliminating the provision or substantially reducing the exposure, such as limiting any future royalty claim to no more than two years. The franchisor refused to revise the agreement. It did, however, state in an email that it had never enforced the provision.
As discussed in our prior article, The Franchisor Will Not Negotiate. Is a Franchise Agreement Legal Review Still Worth It?, the review remained valuable. The client understood the risk before signing, could evaluate it as part of the overall business decision, and obtained the franchisor’s position in writing.
But the email did not eliminate the provision. It did not cap the client’s exposure. It did not guarantee that the franchisor would never enforce the provision in the future.
That distinction is the central lesson.
An Assurance Is Not the Same as an Amendment
Businesspeople often place considerable weight on what was said during the sales process. That is understandable. Franchise sales representatives are building a relationship with the prospective franchisee. The conversations may feel direct, detailed, and sincere.
The franchise agreement, however, often tells a different story about which statements legally control.
Many franchise agreements contain an integration clause stating that the written agreement represents the parties’ entire agreement and replaces prior discussions, promises, and understandings. Most also contain nonreliance provisions in which the franchisee confirms that no outside statement or promise induced the decision to invest.
Those provisions can make it difficult for a franchisee to rely later on a verbal assurance. Even an email may not have the same legal effect as a formal amendment or signed addendum. Its significance will depend on the precise contract language, applicable law, the identity and authority of the person who made the statement, and the surrounding facts.
The practical hierarchy is straightforward:
- The strongest protection is to eliminate the objectionable provision through an enforceable addendum.
- The next best option is to revise or limit through an enforceable addendum.
- A formal side letter or written clarification signed by an authorized representative may provide meaningful protection, depending on its language.
- An email stating the franchisor’s position is better than an undocumented verbal assurance, but it may not override the agreement.
- A verbal statement alone provides the least protection and creates the greatest risk of misunderstanding or later disagreement.
The goal should always be to move as high on that list as the franchisor will permit.
The Writing Lesson: Make the Contract Say What the Parties Mean
There is a broader contract drafting lesson here. Clear legal writing should align the written agreement with the parties’ actual understanding.
If the franchisor says a provision applies only in an extreme circumstance, the agreement should define that circumstance. If the franchisor says damages will never exceed two years of royalties, the agreement should include that limitation. If the franchisor says it does not intend to enforce a particular right, the cleanest solution is to remove or narrow that right.
The more the explanation differs from the written language, the more uncertainty the franchisee assumes.
Lawyers sometimes describe contract provisions as boilerplate, but boilerplate can have real consequences. A provision does not become harmless merely because it appears in every agreement. The signed words remain available to the franchisor if the relationship deteriorates, management changes, or the brand is sold.
Good contract writing is not about making the document longer or more complicated. It is about reducing the distance between what the parties say they intend and what the document allows them to do.
When someone says, “That is not what this provision means,” the natural response is: “Then can we revise it to say what you mean?”
Why the Franchisor’s Current Practice May Not Predict the Future
A statement that the franchisor has never enforced a provision may be completely accurate. But it describes the past. The franchise agreement governs the future.
A franchise relationship may last ten or twenty years when renewal terms are included. During that time, circumstances can change considerably.
The franchisor may hire new executives or legal counsel. The founder may retire. The brand may be acquired by a larger company or private equity firm. Financial pressures may lead management to pursue claims that prior leadership chose not to pursue. A new strategy may place greater emphasis on strict contract enforcement.
The person who made the original assurance may no longer work for the company when the dispute arises.
This does not mean prospective franchisees should assume the worst. It means they should recognize that a contract right can outlast the people and practices that made it seem unimportant at the time of signing.
Get Important Statements in Writing
If the franchisor will not revise the agreement, ask it to confirm important representations in writing. The request can be respectful and direct:
“We understand that you have never enforced this provision and do not presently anticipate enforcing it except in extraordinary circumstances. Would you please confirm that understanding in writing and explain the circumstances in which you believe the provision would apply?”
The answer may be useful in several ways.
First, it reduces the chance that the parties are talking past one another. The franchisee may discover that the franchisor’s idea of an extraordinary circumstance is broader than expected.
Second, it creates a contemporaneous record. Memories fade, employees leave, and verbal conversations are easily disputed.
Third, the response may reveal whether the person making the assurance has authority to speak for the franchisor. A casual statement from a salesperson is not the same as a written position approved by the franchisor’s legal or executive team.
Fourth, the franchisor’s unwillingness to put the statement in writing is itself useful information. If the assurance is important enough to persuade the franchisee to sign but too uncertain to document, the franchisee should consider why.
Treat the Assurance as Information, Not Insurance
An email stating that a provision has never been enforced can still have value. It may provide context, preserve the franchisor’s stated interpretation, help resolve a later disagreement, or give the franchisee additional negotiating leverage.
But the franchisee should not treat it as insurance against the written contract.
The correct approach is to assign the statement its proper weight. It is one fact to consider alongside the actual language, the franchisor’s history, conversations with current and former franchisees, the strength of the business model, and the amount of capital at risk.
The franchisee must then decide whether the unresolved risk is acceptable.
The Best Time to Resolve Ambiguity Is Before Signing
Optimism is natural at the beginning of a franchise relationship. Both sides expect the business to succeed, and no one wants to dwell on termination, default, or damages.
But that is precisely why the agreement should be examined before the relationship begins. It is easier to discuss difficult provisions while both sides still want the transaction to move forward. After a default or termination, every sentence will be read through the lens of a live dispute.
When the franchisor says it has never enforced a provision, listen carefully. Ask follow up questions. Request a revision. Seek a reasonable limitation. Get the explanation in writing.
Most importantly, do not confuse the franchisor’s current practice with a binding promise about the future.
The signed agreement should say what the parties mean. When it does not, the franchisee should understand exactly what remains uncertain before investing.
ABOUT THE AUTHOR
Rush Nigut is a franchise attorney with more than 30 years of experience representing franchisees, franchise buyers, and business owners. He helps prospective franchisees evaluate Franchise Disclosure Documents (FDDs), negotiate franchise agreements, and protect their investment before they sign. His mission at Rush on Business is to help entrepreneurs make smarter franchise decisions through practical legal and business insights.