Legal Question in Business Law in New York

Franchisor took money did not forward to lanlord. result-i'm out on street.

In march of last year I purchased a franchise from a franchisor in nyc. I was a subtenant on the lease the main tenant(the franchisor) did not forward my rent to the landlord. I gave the franchisor $60,000 dollars for the franchise name and I spent another $160,000.00 on renovations. After a year the franchisor stopped forwarding my rent to the landlord.

I have also found out now that the Franchisor in one location that I purchased from him did not forward my rent for 10 months pocketing the money. I have already been kicked out of one store and will be on the street in the other 2 locations any day now. I have lost everything and I am still responsible for the loans I took for the $160,000. Please tell me if i have any rights to go after this guy. He is still in business and is now selling licencing deals instead of franchise. Every time i try to contact him all he tells me is '' Go ahead and sue you will get nothing and it will cost you more than you owe in your loans'' Please tell me do I have a case and if I do how much something like this will cost in legal fees. I lost every thing with this guy and I am paying money from my pocket for these loans for the next 3 years


Asked on 12/30/00, 12:57 pm

3 Answers from Attorneys
Michael Markowitz Michael A. Markowitz, PC

Re: Franchisor took money did not forward to lanlord. result-i'm out on street.

I simply cannot answer your lengthy question in this format. It seems to be obvious that you have grounds to file a lawsuit against the franchisor.

Since it seems that the actions taken by the franchisor were criminal, I strongly suggest contacting the NYS Attorney General. Contact information can be found on its web site. The address is www.oag.state.ny.us. The Attorney General may intervene on your behalf.

Mike.

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Answered on 1/04/01, 11:49 am
Andrew Campanelli Perry & Campanelli, LLP.

Re: Franchisor took money did not forward to lanlord. result-i'm out on street.

There are a significant number of actions you may take to protect your rights and to recover your monies. One would be a civil suit against the franchisor. It is significant to note that even if he was doing business as a corporation (which might be judgment proof) it sounds like you should be able to establish grounds for personal liability against him. You might also be able to file a lien upon the real property for the value of the work you had done. This is a powerful tool with which to recover your money. You might also file a criminal complaint in the hope that he would be prosecuted and any "plea" to settle the criminal action would include the prosecutor requiring him to pay restitution to you. There are far too many issues to address in this response. Should you so desire, you may feel free to call my office to schedule a free consultation. Very truly yours, Andrew J. Campanelli (516) 746-1600

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Answered on 1/04/01, 1:53 pm
Walter LeVine Walter D. LeVine, Esq.

Re: Franchisor took money did not forward to lanlord. result-i'm out on street.

There are many claims available: fraud, conversion, misrepresentation, etc. There may also be SEC violations, since franschises are similar to securities transactions. I suggest that you contact the attorney general, the SEC and a local attorney - coordinate between all of them. You probably have personal as well as corporate claims, and retaining a New York attorney is advisable.

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Answered on 1/08/01, 10:37 am


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