Legal Question in Business Law in Delaware

We own a franchise and the franchiser wants to sell or dissolve the company. We are one of two remaining active franchisees and have ongoing contracts to fulfill. Can the franchiser simply sell or 'close' the company and we are left with no recourse or does he have to buy us out? He has also offered to 'sell' us the company, but we have already paid our franchise fee and done more than our share of the requirements in the contract (marketing, national sales, etc...)

1. Should we be expected to pay him to continue our business?

2. Does he owe us money should he close the company?

3. Do we simply close our franchise because of his choice to bow out?


Asked on 11/30/10, 8:31 am

1 Answer from Attorneys
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I can say it's not possible to answer your questions without reviewing the franchise agreement you signed AND the disclosures in the related Franchise Disclosure Document (that may have been called a Uniform Franchise Offering Circular, or UFOC). The bigger picture is you may want to consider buying out the franchisor. Established franchise companies with an operations manual, legal doc's, etc. have a certain value that, if the price is right, can be resold at a profit to others. I've consulted on similar cases in the past. Consult with a good business or franchise attorney ifor specific advice.

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

Franchise Foundations, a Professional Corporation

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Answered on 12/05/10, 11:36 am


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