What Happens If You Are Sued For a Franchise Lawsuit?
The franchise lawsuit industry is booming! Lawsuits are rising at an alarming rate, most of which involve a franchisor trying to force a franchisee not to eat their pizza. There is nothing more frustrating and disheartening for a franchise owner than being served with a legal notice for a lawsuit. Finding a good franchise attorney can help you get through this quickly and without falling victim to one of these lawsuits.
Franchise lawsuits are typically brought on the basis that the franchisor has not complied with the terms of a franchise agreement.
Franchises are very similar to corporate franchises in many ways, but they are also very different from traditional businesses. If you start up a franchise business, there is a risk that the business will succeed. Many franchises succeed in the end because the people who started them saw great potential in the franchise and put in lots of hard work and perseverance. If you are a franchisee, and you find yourself being forced to liquidate your franchise or move to another jurisdiction, it is important to consult with a franchise lawyer to determine if there is anything legally wrong with your conduct.
The first thing that needs to be determined is whether or not there are grounds for the franchise lawsuit.
The franchisor typically has an argument that may help them in court, but there are usually two sides to every story. For example, a franchise owner may have been forced to relocate to save their franchise. The franchisee must then show why moving is in direct and substantial detriment to the success of the franchise.
Another reason that a franchise lawsuit may be issued is that the franchisee was forced to sell the franchise to someone who did not have the financial capital to keep the franchise going.
This can happen because the franchisee was unable to acquire enough franchisee’s licenses from other companies. A franchise lawsuit is issued when the franchisee attempts to transfer the franchise to another company in which they may be able to receive a license, but they do not have the financial means to continue the franchise. Once the franchise sale is made, it becomes the responsibility of the franchisee to take care of the business until it is sold again.
It is also possible that a franchisee files a suit against a former franchisee who owed them money when the franchise was still under their control. In this instance, the franchisee may file a claim for breach of contract or breach of trust. The lawyer that you hire in your case should be able to help you determine whether or not your case has merit and if it has grounds for a case against the former franchisee.
Before filing a franchise lawsuit, you will also want to find out whether or not you can collect any damages from the company in question.
If a franchise is sold to a third party for a price that is much less than the franchisee originally paid for the franchise, there may be no damages available to you. On the other hand, if the price that you paid for the franchise was substantially higher than the value of the company that you bought it from, then you could collect damages. If you end up having to go forward with a lawsuit, you will need to have evidence of the amount that you lost and how much money you are owed. This can be done by hiring an expert to examine the purchase agreement or purchase order document.
It is always important to find out what kind of recourse you have if you win your franchise lawsuit.
Some of the most common is a credit judgment. If the company has defaulted on a loan, which is a regular occurrence in most franchises, they will be held personally liable for the money that you lost as a result of the company’s failure to make payments on the loan. If you are awarded damages for this type of franchise lawsuit, your credit rating will suffer for quite some time. This will affect future purchases and, if you happen to default on your loan, will cost you a great deal more money in the long run.
The last thing to think about when you file a franchise lawsuit is how your potential franchisees will feel about the whole situation. You may end up having to sell the franchise that you have worked so hard for, or you could find that the company that you bought is no longer around. Both situations could mean a great deal of heartache for everyone involved. Hopefully, though, you have done everything that you can to protect your franchise and to stop any further legal trouble from coming your way.