Strange things can happen in the world of franchising when you cross state lines.  For example, let's consider the state boundary called the Delaware River - pretending to be General George Washington crossing the Delaware between Pennsylvania and New Jersey.  We all recall--right?--that Washington paddled East to surprise the Hessian forces camped at Trenton.  So, here is the quiz - as a franchisor or franchisee, would you rather paddle East or West?

I expect that an experienced franchise attorney will easily answer this question. New Jersey is the home of some of the most restrictive regulations for franchisors (or, depending upon your viewpoint, protective regulations for franchisees) in the United States.  New Jersey protects franchisees from unlawful termination, even overriding a franchisor's refusal to renew a franchise agreement without cause. So, all things being equal--and, of course, they are not--a franchisee would prefer to paddle toward New Jersey if  state franchise law was the only reason to choose. But what about Pennsylvania? In contrast with New Jersey, Pennsylvania has promulgated no regulations specifically addressing the relationship between a franchisor and franchisee.  In other words, under Pennsylvania law and regulation, a franchised company has the same rights as one that is not franchised.  In addition, case law in Pennsylvania does not impose any additional fiduciary duties or burdens of good faith or fair dealing on a franchisor above those of a non-franchised company.  (Though, it should be noted, as with other companies doing business in Pennsylvania, a franchisor must comply with the implied covenant of "good faith and fair dealing" which applies generally to contractual dealings in Pennsylvania.)

The reason I point this out is that franchisee and prospective franchisee business owners often come to us under the mistaken impression that, as a franchisee, they have additional rights and remedies under any state's laws and regulations.  To be sure, this is generally not the case and the written word of the franchise agreement simply will not be rewritten by any franchise-specific case law or regulation.

Of course, a franchisee can always file a complaint with the Federal Trade Commission, but the odds of the FTC turning an individual complaint into an investigation are quite low.  Thus leaving little additional remedy beyond general corporate law to the franchisee resident in Pennsylvania (or most other states without a written franchise specific rule or regulation) on which to hang its hat.