Legal Question in Business Law in Arizona

I need to know if I have a case. I purchased a licensing agreement to operate my business. The agreement gave us the use of the licensor's name. We actually paid for the use of a dba in a licensing agreement only to find out later that the name we paid to use was technically never a registered dba/tradename, but simply a legal corporation that has since been administratively dissolved by the State. My fear is that someone could take the name and force us to operate under a different name. Second, we paid for the use of the Licensor's vendors. They were to provide us with the vendors, so we could benefit from their years of dealing with the vendors. The Licensor will not give us direct access to the vendors. I did some research and found that the Licensor is inflating the costs of the products, and skimming off the top. We paid a nice fee to get access to their vendors and the benefits of having them. The only benefit is to the Licensor. Last is the licensing fee itself. They told us they were cutting us a deal, so "don't discuss it with the other Licensee's". Come to find, they charged us twice the price for our license. Can anything be done to bring these theives to justice?


Asked on 11/22/10, 10:59 am

3 Answers from Attorneys
Donald Scher Donald T. Scher & Associates, P.C.

It sounds like you have a case for breach of contract, fraud, misrepresentation, etc., however, the question is whether you can collect from the licensor once you get a judgment. If there are a bunch of other licensees, who paid 1/2 of what you paid, what is their story about the licensor? You should pursue the licensor, asap.

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Answered on 11/27/10, 11:21 am
Kevin B. Murphy Franchise Foundations, APC

As a franchise attorney, I also add that there is a much bigger potential picture here. Was your "license" really a disguised, illegal franchise? Many of them are these days. If it is, this gives you a very significant cause of action. There's a good article about this on the Franchise Foundations website, on the Franchise vs. License page. Consult with a good business or franchise attorney for an analysis and specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Attorney

Franchise Foundations APC

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Answered on 11/27/10, 1:49 pm
Donald W. Hudspeth The Law Offices of Donald W. Hudspeth, P.C.

Murphy is right, it sounds like you bought a franchise. It also sounds as if, under the breached terms of the contract, you have some leverage with the Seller to negotiate a better deal. Can you contact the other buyers to find out if they have any gripes? Depending on the circumstances and your best interests, you may want to go it alone to get more compensation for yourself, or you may want to instead form a group action to leverage greater negotiation power. We would need to do an analysis of the documents, legal research, and talk to you about the specific circumstances in order to get an idea of the courses of action which you have to choose from.

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Answered on 11/29/10, 11:03 am


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