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Encroachment and Franchisee Claims of Constructive Termination

By Craig R. Tractenberg

“Encroachment” is a term used in the franchise industry to describe sales and revenues being transferred from one location to another because of their proximity. If a new location is established near an existing franchise location, then it is possible that existing sales will be transferred from the old location to the new. Litigants sometimes claim the encroachment is so extensive so as to threaten the viability of the existing location. In these instances, claims have been asserted for constructive termination because the existing location is alleged to no longer be viable. More likely, the claim for constructive termination is not viable.

Measuring Impact

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