Franchisors cannot cancel "the flag"once the franchise contract is signed even if the property deteriorates; they must simply wait until the contract period ends.

Question

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Franchisors often include provisions in the franchise agreement that allow them to cancel the franchise (or "pull the flag") if the property does not meet certain standards or if the franchisee violates the terms of the agreement.

Franchisors Cannot Cancel "The Flag"once the Franchise Contract Is Signed