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tdlawyer
tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience:  11 years experience of general practice.
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Hi, If a franchise agreement is made out to the owners

Resolved Question:

Hi,

If a franchise agreement is made out to the 'owners of' a Ltd company - with 4 separate names listed, so the franchisee is stated as being
"the owners of company X ltd, namely Person A, B, C & D"
Am I correct in thinking that the franchisee is each of the 4 people as individuals and not the Ltd Company, and in that case, should any of those 4 people change (as shareholders of the Ltd company have changed), agreement could be considered invalid, and a new one would need to be greater?
Thanks
Submitted: 3 years ago.
Category: Law
Expert:  tdlawyer replied 3 years ago.

tdlawyer :

Hello, welcome to the website. My name isXXXXX can assist you with this.

Customer:

Thanks - what's your opinion/

tdlawyer :

Normally, where an agreement states that it's with the owners of a limited company, it would mean those shareholders of the company.

Customer:

And if any one of that collective of names changed, would that mean that the agreement would need to be revised and made out to the new collective 'owners'?

Customer:

And just to be clear, by default of them being shareholders, it doesn't mean the company.

tdlawyer :

Not necessarily - it depends. It depends on what the agreement says about this (if anything). technically, identifying people owning a company is distinct from the company itself. So, even if the shareholders change, the people that owned it at the time of the agreement being entered into will still own it - a new shareholder will not, as they haven't agreed to sign up to the franchise agreement.

Customer:

It doesn't say much at all, at the outset when the 'you' is defined it states "The owners of X Ltd t/a the ........Centre, defined as Ms A, Ms B, Ms C, Ms D ("the licencee", "you", "yourself".

Customer:

And then for signature it is 'signed for on behalf of the t/a company name by Ms A.

Customer:

I am the franchisor to help with clarity of position, who has inherited a couple of old agreements that I want to be able to release and renew in the name of one person.

tdlawyer :

Then it sounds like it's with the people and changing shareholders will not affect that.

Customer:

So - last question! If any one of the 4 names has left the 'collective' list of names, then as the 'group' of people as the franchisees has changed, then a new agreement in the current correct 'group' of people would be appropriate? And I can use that as a valid reason for the contract to be deemed invalid?

tdlawyer :

They might have left the company, but they still are party to the franchise agreement. From what you've said, this doesn't of itself amount to a reason to say the agreement is invalid. Sometimes, the agreement might require people to be involved in the business at all times, devoting full time and attention to it, which if they're not, this might be a breach and might mean it can be terminated.

tdlawyer :

Does this make sense?

Customer:

Yes, and as none of them are actually teaching under the agreement at the moment, they are not meeting the targets (they have an entirely separate person who is now a shareholder of the company and acting as MD teaching all provision under the franchise agreement), and her name is XXXXX XXXXX on the contract at all. So in actual fact, as it stands, they are not meeting the terms of the agreement, and I can deem it invalid.

tdlawyer :

Well, just because there is a breach doesn't mean it's invalid. It depends on the agreement. Most often, franchise agreements themselves say when an agreement is to be invalid and in respect of what type of breach.

tdlawyer :

If they don't, then it's more difficult, and it would have to be a breach that destroys the agreement in effect to entitle you to end it.

tdlawyer :

The best thing for you to do if unsure about this is to take it to a solicitor and go through the background with him, and point out which clauses you believe have been breached.

Customer:

Thanks for your help,

tdlawyer :

You're welcome. Are you happy with the service today?

Customer:

Yes, will rate right now, thank you.

tdlawyer and 2 other Law Specialists are ready to help you

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