Legal Question in Business Law in Texas

I want to buy a mail box business in texas and i have a friend who is willing to loan me the money like $20000 without any interest but he wants to file some kind of lien on the business that if i dont pay him monthly than he can take over the business from me or some kind of legal agreement that prevents me from selling the business and that gives him rights if i loose out in the business also to where he can get some judgement against me if i dont pay him back his money whether i get successful in my business or not . is there any kind of lien/contrat agreement we can file where he is protected since he is loaning the money out of good faith with no interest


Asked on 11/09/10, 7:24 pm

2 Answers from Attorneys

Yes, there are a few things you can do. However, if the business you are buying is a franchise, then the franchisor will need to approve this. Otherwise, if your friend takes over the business, s/he may be in for a nasty surprise. What I would recommend is incorporating your franchise, executing a promissory note to pay your friend back, and then issue a security agreement such that your friend can take over the business if you don't pay back the loan. Again, get the franchisor to approve this transaction (and the supporting documents) ahead of time. Also, if you're plunking down $20k of someone else's money to purchase a franchise, PLEASE hire a franchise attorney to review your FDD and franchise agreement so you will know EXACTLY what you're getting into. There is MUCH, MUCH more to running a franchise than what's in the franchise agreement.

Read more
Answered on 11/14/10, 8:25 pm
Kevin B. Murphy Franchise Foundations, APC

As a franchise attorney, I can say the other attorney is right on point here. A competent review of the franchise is critical before any decisions are made. Working out the details and security interest for the $20k loan are secondary. Consult with a good franchise attorney for specific advice.

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

Franchise Attorney

Franchise Foundations APC

Read more
Answered on 11/15/10, 6:15 am


Related Questions & Answers

More Business Law questions and answers in Texas