Legal Question in Credit and Debt Law in Virginia

Franchisor debt assumption
My wife, I and another person owned a franchise through an LLC. Our business failed and accumulated some debts that we could not pay. The business was an LLC but on some debts my wife signed personal guarantees. Eventually we let the franchisor take over the franchise and in return the franchisor agreed to pay some of the debts for which my wife signed the personal guarantees. The franchisor was hoping to sell the franchise to another franchisee and in the process make a lot of money. It turns out the franchisor could not or did not make a profit and as a result is not fulfilling its obligation to repay the assumed debt. One of the creditors is now suing my wife for the personal guaranty she signed. The other defendants in the collections suit are the LLC and the third person who signed the personal guaranty since both my wife and the third person signed the personal guaranty. What are our options and how can we get the franchisor to pay the debt?

Asked on 8/20/08, 8:04 pm

Michael Hendrickson Law Office Michael E. Hendrickson

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Re: Franchisor debt assumption

Your wife (in my opinion)should file suit to have the franchisor brought into her collection suit as a third party defendant.

Answered on 8/22/08, 10:51 am

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