Does the Benjamin Franklin Plumbing agreement create a fiduciary relationship between the franchisor and franchisee?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
- 22.9. Our Business Judgment.
Except as otherwise expressly provided in this Agreement, whenever we exercise a right and/or discretion to take or withhold an action, we can make our decision or exercise our discretion based on our judgment of what is in the best interests of the Brand at the time, even though (a) there may have been alternative decisions or actions that could have been taken; (b) our decision or the action taken promotes our own financial interest; or (c) our decision or the action may apply differently to different franchisees.
In the absence of an applicable statute, we will have no liability to you for any such decision or action.
If applicable law implies a duty of good faith and fair dealing in this Agreement, we and you agree that
the duty does not encompass any rights or obligations that are inconsistent with a fair construction of the terms of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 88–312)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Benjamin Franklin Plumbing franchise agreement does not explicitly state that a fiduciary relationship is created between the franchisor and franchisee. However, section 22.9 addresses the franchisor's business judgment, stating that the franchisor can make decisions based on its judgment of what is in the best interests of the Brand, even if such decisions promote the franchisor's own financial interest or apply differently to different franchisees.
Furthermore, the document states that in the absence of an applicable statute, Benjamin Franklin Plumbing will have no liability to the franchisee for any such decision or action. If applicable law implies a duty of good faith and fair dealing, both parties agree that the duty does not encompass any rights or obligations inconsistent with a fair construction of the agreement's terms. This suggests that while there is an expectation of fair dealing, it is limited by the express terms of the franchise agreement.
Prospective franchisees should be aware that this clause allows Benjamin Franklin Plumbing considerable latitude in making business decisions that could impact individual franchisees differently. It is crucial for potential franchisees to seek legal counsel to fully understand their rights and obligations under the franchise agreement and to assess the potential risks associated with this clause. Understanding the scope and limitations of the duty of good faith and fair dealing is essential for a successful franchise relationship.