Franchisee Under Reporting - Termination for Fraud?

It is an unfortunate fact of running a franchise network based on a royalty income stream, that from time to time a Franchisor will uncover evidence of franchisees under reporting the gross income of their businesses. In these circumstances, Franchisor's wish to understand their rights to terminate the Franchise Agreement for fraud. Although, each matter will need to be considered on a case-by-case basis, a broad overview of the key principles in terminating for fraud is as follows:

• Fraud is a very serious allegation and there is a high onus to establish it. Prior to termination, the Franchisor must be completely satisfied that it is in a position to prove fraud in Court.
• Assuming that evidence of fraud exists, the entitlement to terminate will typically be based upon: