You should speak with an attorney about seeking damages. A lawyer will have to review your documents and advise you more specifically. I handle these types of matters, fee free to call me for a more detailed consult.
Contact me for a more detailed discussion of your issue at 215-822-7575, or by email at firstname.lastname@example.org. This answer is based on general legal principles only and is not intended to provide specific legal advice. This answer is for informational purposes only and does not constitute the formation of a lawyer-client relationship.
The very heart of a franchise agreement is a trademark license that permits the franchisee to use the franchisor's trademark [here, the trademark is the name of your deli]. When a franchisee suddenly stops doing business sometimes a partner or employee or competitor gets the crazy idea that they can open up a new shop using that same trademark [after all, the old trademark is no longer being used]. So, as the franchisor, YOU need be especially vigilant to ensure that this does not happen. You should also make sure that the sign with your deli name that's on the buildings formerly used by your franchisees is removed. You may also need to expressly abandon any fictititous business name statements filed by the franchisees. In short, in addition to trying to recover whatever money the former franchisees own you, you need to spend some time making sure your trademark [which is literally the symbol that embodies all the goodwill of your business] is not damaged. Speak with a franchise attorney licensed to practice in your state and discuss these trademark issues [that attorney may need to bring in a trademark attorney -- which will be for certain if you DO NOT have a franchise agreement]. Good luck.
The above is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry.
Oops, you forgot to state a question. It is hard to give you advice when we do not know what you want to know. If they stopped using the trademark and removed all the signage than what you need is a contract lawyer to evaluate the advisability of suing them for breach of contract. If they have not stopped using the trademark, then the you need to try to recoup all of the materials that are branded with your trademark or service mark. You will likely want to consult with, and intellectual property law attorney to see that these franchisees have not established any independent rights, particularly if you do not have a franchise agreement. Hopefully you have a agreement that spells out what happens with the trademark. What happens with the trademark is probably more important to you in the long run than with you collect your money or not.
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.
Sir you need to sit down and speak with a qualified attorney that is licensed in those states and handles these sometimes complex business disputes that may result in litigation.
Any attorney will have review your contracts to determine the next step. You should also provide a short but detailed narrative.
Our office is licensed in both states and handles these types of issues regularly. Please reach out to us for a free consultation.
Best of luck!
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As a franchise attorney helping companies franchise as well as advising individuals, as a franchise expert, on making franchise investments, I agree with my colleagues and add the following.
Part of the planning that should have preceded your entry into franchising was to deal with this possibility. Was this done? Especially in today's economic climate, businesses simply close the doors. Normally a franchisor provides for a variety of protective measures, like personal guarantees, step-in rights, de-identification, etc. to protect itself and its intellectual property if (when) something like this happens.
My best advice is to have a franchise attorney review the contract to see what rights and remedies are available, then to advise on the best going forward strategy.
This is something you should do asap.
Best of luck,
Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Attorney & Franchise Expert
Director of Operations - Mr. Franchise
FRANCHISE FOUNDATIONS APC
Your brief message does not provide any of us with enough information to help you. If you would like to give me a call I would be happy to provide an initial consultation free of charge. You can call me at 215-525-1165 x101.
This response does not create an attorney-client relationship and is not intended to provide legal advice for your specific situation.