Compensating Franchisees for Non-Renewal or Termination of Their Agreements: A Comparative Study Highlighting the Approaches in Kuwait and the United States

The question of the protection and compensation available to the franchisee when the franchisor terminates or does not renew a franchise agreement and the restrictions imposed on the franchisor to terminate the agreement, and whether franchisees should be protected by law against termination without cause are among the most controversial issues in franchise law. Needless to say, the global economy is expanding and, therefore, suppliers and manufacturers are devoting significant effort, time and resources to seize and look for new opportunities to sell their products in overseas markets. In order to find access to these markets, suppliers and manufacturers usually depend upon local, reputable, and well-known distributors to market and sell their products. Agreements between franchisors and franchisees often occur between parties with unequal bargaining positions. This dissertation provides an overview of the issues that are regularly deliberated before courts with respect to termination or non-renewal of a franchise relationship and the remedies available to franchisees based on a comparison between Kuwaiti law and U.S. law. The analysis focuses on: (i) how the law addresses the guarantees and compensation available to franchisees and the calculation of the compensation available to franchisees under Kuwaiti law; (ii) the restrictions imposed on the franchisor and the types of compensation available to the franchisee under U.S. laws; and (iii) a comparison between the Kuwait and U.S. franchise laws and regulations. This dissertation also considers the non-legal and commercial impact of termination or non• renewal of franchise agreements and the benefits of franchisees joining associations to enhance their collective bargaining power, pushing legislative bodies and other decision makers to ensure that their rights and interests are protected