Ask a Lawyer - Archive

We acquired 2 [franchises] more that 2 years ago. It was agreed that [the franchisor] was going to guide us every step of the way to help us build and open our two restaurants. So far, we haven't had any help from them. We have been given an ultimatum of either finding a site within 90 days or receive 10% of initial fees. since they haven't provided any help, can we sue them to get our money back?

You are finding out how risky it can be to buy a franchise. Even if the name is well known, there are no guarantees the business will be successful. Given the risks involved, states have laws that specfically govern franchises.

Generally, this requires that a company register with the state before offering a franchise, unless exempted from doing so. The franchisor is also required to make full written disclosures of the terms of the frachise offer. You probably have a copy of all the disclosure documentation, which you should review carefully and fully understand in the context of what the franchisor is telling you. You could also contact the Department of Corporations or whatever agency regulates franchises in your state and see what you can find out from them. Also, any realistic chance of success in pursing a remedy against the franchisor is going to hinge on your hiring a lawyer, which you should do sooner rather than later.