Franchises Can Sue Each Other for Unfair Practices in the U.S.

Lawsuits between franchises are possible, but there are several legal complexities to consider.

Published on Mar. 8, 2026

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Franchises in the U.S. can sue each other for unfair practices, such as territorial encroachment, trademark infringement, or deceptive trade practices. While a lawsuit is possible, there are various legal grounds and regulations that must be navigated, often requiring the assistance of a franchise attorney to identify contractual breaches and the most suitable legal approach.

Why it matters

The competitive nature of the U.S. franchising market means disputes between franchises are not uncommon. Understanding the legal avenues available for franchises to address unfair practices is important, as it can impact the viability of individual franchise locations and the broader franchise ecosystem.

The details

Franchises can sue each other under several legal grounds, including unfair competition, trademark infringement, tortious interference, and deceptive trade practices. If both franchises operate under the same brand, the dispute often centers on territorial infringement, where one franchisee encroaches on another's permitted area. For competing brands, claims may arise under federal or state unfair competition laws, such as the Lanham Act or Unfair and Deceptive Trade Practices Acts. Franchises may also pursue claims for tortious interference if a rival deliberately disrupts their contractual rights, business relationships, or customer base.

  • The Federal Trade Commission (FTC) enforces regulations designed to ensure transparency and fairness in franchising, particularly through the Franchise Rule.
  • Most states also impose specific franchise relationship laws and business opportunity statutes that provide an additional layer of protection against deceptive or unethical conduct between competing franchisees.

The players

Jason W. Power

A franchise attorney at Franchise.Law who provides insights about how and why franchises can sue each other for unfair practices.

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What they’re saying

“Failure of a franchise to abide by territorial restrictions may amount to unfair practices and be a valid ground for a legal dispute.”

— Jason W. Power, Franchise Attorney (Franchise.Law)

What’s next

A key next step is for any franchise affected by the unfair practices of another franchise to contact a qualified franchise attorney to help identify the most suitable legal approach and avoid making the wrong move when bringing a claim.

The takeaway

Franchises in the highly competitive U.S. market have legal avenues to address unfair practices by other franchises, but navigating the complex web of contract law, competition regulations, and jurisdictional differences often requires the expertise of a franchise attorney to ensure the best outcome.