Legal Question in Business Law in California
If I purchased a business based on the information in a business for sale ad and it's annual revenues were misrepresented do I have any legal recourse?
We were duped with visual computer screens (at multiple meetings) backing up the amounts in the ad but were told for the territory we were buying the territory revenue could not be separated from all the other territorys into separate financials and that we could not have any documents to back up these figures because we were told it was proprietary and could not be released until we became official owners of the franchise. I purchased this territory from a private owner who is still very involved with this corporate franchise.
4 Answers from Attorneys
Yes, potentially fraud which would provide, in addition to compensatory damages, punitive damages.
I'm betting you did your deal without an attorney, since any decent corporate attorney would have seen the red flags in the situation you describe. You are going to have a problem with reliance, since they did not give you information and you had a duty to exercise due dilligence in deciding what information was relevant to your decision. So unless they promised a specific revenue stream that was false, you will have a hard time. Still, this is an old story and courts are used to seeing this kind of thing. So you can probably get it to trial if you want to sue. All of which is a long way of saying you don't have a slam dunk case, but you have something that sounds worth pursuing. I have a court appearance in Napa Superior Court on October 7, and would be happy to meet with you afterward for a free consultation, if you would like to go over the details and get a more educated opinion of your options. If the 7th does not work for you, I would be happy to see you in my Walnut Creek office on another date, again at no cost or obligation.
Yes, you can bring an action and seek recovery, depending on the details. If you are looking to retain counsel, I am happy to help.
Best,
Daniel Bakondi, Esq.
415-450-0424
The Law Office of Daniel Bakondi, APLC
870 Market Street, Suite 1161
San Francisco CA 94102
http://www.danielbakondi.com
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You need a franchise attorney to review this transaction. If you were given annual revenues in an ad or via computer presentations, these are considered "earnings claims" and must be disclosed in detail in the FDD - Franchise Disclosure Document. The earnings claims must meet strict standards and disclose the factual basis, etc. of the information. Consult with a good franchise attorney for specific advice.
Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise
Franchise Attorney
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