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I bought a tutoring franchise that isn't making money will I be liable in any way if I close and walk away from the franchise
I bought a tutoring franchise a year ago. The Franchise is not generating any income due to economic situation. I do not have any money to take care of expenses. I would like to close the Franchise and walk away. I need help and guidance. Thank you.
You need to have a franchise attorney review the contract you signed in order to determine your financial exposure and identify the best strategy for you to pursue. With liquidated damage clauses, minimum royalty paymnents over the term of the contract, attorneys fees and other clauses, you could have a great deal of financial exposure.
Do not make a decision in the dark. Consult with a franchise attorney.
Kevin B. Murphy, B.S., M.B.A., J.D.
Mr. Franchise
FRANCHISE FOUNDATIONS, APC
In addition to the answer you already received, I would be very careful in just closing the door and walking away. It is likely that you personally guaranteed both the franchise agreement and your lease for the business. If so, your personal assets could be at risk for the obligations contained in both agreements. I would suggest you attempt to negotiate with both your franchisor and landlord to pay a fee to be relieved from your obligations.
Tutoring franchises have been going bad as investment opportunities for at least three years. If you bought one within the last three years and the opportunity was misrepresented to get you to buy it, you may have a way out. If you bought it more than three years ago, your time to bring a claim mayh ave run out. In some tutoring franchise agreements there is a contractually shortened claims period of one year. You have to read your contract for that. It is likely that your agreement has a liquidated damages propvisions that claims to obligate you for continuing payments to the end of your franchise term if you close the business.
