Posted by Elizabeth Gore-Jones
on 29 November 2023
We often act for franchisors who are owed money by their franchisees.
Our experience has predominantly been that franchisors are willing to work with franchisees to either negotiate payment terms or a reduced sum so that the matter can be finalised amicably between the parties.
A point of frustration for franchisors is when they reach out to these franchisees and are ignored.
In so many instances, franchisors will give franchisees so many opportunities to reach out and reach a resolution and the franchisee will ghost them or otherwise not cooperate.
We then find that the franchisors institute proceedings against those franchisees and the franchisee still does not defend or respond to those proceedings.
The franchisee then finds themselves with default judgment against them, a bad credit rating and action being taken to recover payment of the debt. In some instances, this can result in bankruptcy proceedings.
On top of that, many franchisees do not realise that, even if they have entered into their franchise or documents through a company, they have provided personal guarantees (much like a personal guarantee under a mortgage or loan from a bank) and, as such, are personally liable for their company’s debt.
If you are a franchisee in these situations, you should:
1. respond to communication (Most often, it will not just go away!);
2. attempt to negotiate a payment plan or a reduction in the claimed debt which is affordable to you; and
3. respond to court processes.
Fear not, though! You do not have to navigate this alone. We specialize in assisting franchisees in these challenging circumstances.
Contact us now for expert guidance and dedicated support!
