Can a 20-year franchise investment contract be terminated before at any time?

Question

My brother put $40K in his franchise business with a 20 year contract. He lost his workers and could not do it by himself in this business. He considers terminating it as soon as soon as possible and will lose all his accounts, though. Is it possible to end his contract this way? Please advise me asap.

Answer 1

A lot depends on the franchise contract he signed. There are some that include a clause which says that if the contractor can't stay up to par with operations or a long list of company requirements that would result in a breech of contract.
Most the time yes, that means losing everything he invested, often enough the company will take over the franchise and resume operations under their own management.
However he would be best to have a lawyer review the contract

Answer 2

You didn't mention what the contract says, which would be interesting to know. Also, no matter what it says, you need to know how the people at the company are likely to behave. I'll take a wild guess that the money he has already invested is gone for good. No need to throw good money after bad.

Now the good news: If he's broke he can't give anybody money he doesn't have, and it doesn't make sense for anyone to sue a pauper. When the well runs dry, empty is empty. If he has any assets, a house, for instance, he should transfer ownership to someone he can trust, you, for instance. This has to be done more than 30 days before anybody files suit, or it will be considered a false transfer.

He might consider filing for bankruptcy, or just not paying. Check Google.com. There will be a box to type something in. Suppose he lives in the United States, in Oregon. You would type in "statute of limitations debt oregon," without the punctuation. If he lives in another country you might type in something like "statute of limitations finland," or something appropriate. Some countries have states or provinces or I know not what. You might need to experiment a little.

If he's not going to pay, that means DON'T PAY ANYTHING EVER. Usually the statute of limitations on a debt will start running from the day the last penny was paid on the debt, but that may vary in different jurisdictions.

Answer 3

You would have to review the terms of the contract signed. There are sections for: Termination of Franchise. There could be conditions under which either Party could be held blameless.


Sometimes you can get out if you give enough advance notice.

Keep in mind that the Franchiser has to legally enforce its contract and some firms don't have the money to legal on retainer to go after cases like this.