How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Alex J. Your Own Question

Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3495
Experience:  Solicitors 2 years plus PQE
13113900
Type Your Law Question Here...
Alex J. is online now

I have a question regarding the termination of a franchise

Customer Question

Hi I have a question regarding the termination of a franchise contract under which I as the franchisee owe monies. There is a termination provision which allows me as the franchisee to terminate the contract without cause. The Franchisor wants to offset the monies owing under this contract against monies he owes me under another separate contract leaving me in a difficult financial position. I'm considering whether to terminate the agreement however I'm concerned the Franchisor won't pay me out under the other agreement. Just need some advice as feel very bullied and under duress.
Submitted: 3 months ago.
Category: Law
Customer: replied 3 months ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 3 months ago.
Hi there I have attached the 3 agreements. The first was signed for the franchise in London with an option to but HK. The HK agreement was signed afterwards however by joint agreement the outstanding amount was being paid out of commissions up until this year when due to the memerb of staff not working out in Hong Kong we agreed to close the office and resell it. In Dec I entered into a seperate agreement to acquire the cash flow for 2 years of the international business and option to 50% of any future franchise sale. To date I have receievd around £10000 in fees up until May. In August Kevin said that he wanted to of set the outstanding HK amount of US24,800 against the International comms which equal US20,000 approximately. This obviously has messed up my cash flow and I'm concerned I will not receive further monies or proceeds of a franchise sale. I have tried to negotiate a way forward but I think I am entitled to receive the international comms. Hope that makes sense. Thanks for you help. Helena
Expert:  Alex J. replied 3 months ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Neither of these agreements contain a right of set off,deduction or counterclaim - therefore they are not allowed to set monies from franchise territory again another. If you were to sue to recover the monies which country is the debtor based in? Kind regards AJ

Customer: replied 3 months ago.
Hi Alex, I owe him under the UK contract for Hong Kong but have a right to terminate this agreement. He is trying to offset this amount against the international agreement. We are both UK based. Can you call me on*********** Thanks
Expert:  Alex J. replied 3 months ago.

Hi, Thank you. Have you written to him refusing the set off? When do you have to pay the international contract? Kind regards AJ

Customer: replied 3 months ago.
Hi Alex, I have tried to negotiate but he says he want to offset it. What I need form ou is the legal position under the agreements. Can you provide this to me? Otherwise this will go back and forth. Thanks Helena
Expert:  Alex J. replied 3 months ago.

Thank you. The legal position is straight forward

- he has no right if set off under the contracts - if he does set off the money he is in breach of contract. The contracts are completely seperate and therefore so are the payments. If he continues to refuse would you be prepared to sue him for breach of contract? Kind regards AJ

Customer: replied 3 months ago.
Hi Alex Thanks for your email . I understand there is no right to set of but how do I go back to him as he is refusing to pay under the international agreement. Do I have a right to terminate the Hong Kong Agreement without cause so I don't owe him the monies?What happens if he still doesn't pay me under the International Agreement? What are my next steps? CAn you please give em a call on***********this morning? Bets Helena
Customer: replied 3 months ago.
Hi Alex, Do you think he will sue me for non payment under the other agreement and do I have to pay him given that he let the payment go after 15th member was paid. Should I terminate the contract so I don't have to pay the remainder of the monies?
Yes I would be prepared to sue him.
Expert:  Alex J. replied 3 months ago.

Hi thank you. I have received this. I am away from my PC at the moment but will review this and revert to you as soon as possible. Kind regards AJ

Customer: replied 3 months ago.
Thanks Alex. I just need you to advise me please on what my legal position is under each of the agreements. When I have to pay the balance on the HK licence, whether I can terminate the Hong Kong Agreement without cause and what that means and whether Kevin can terminate the international contract and how best to proceed. Thanks Helena
Expert:  Alex J. replied 3 months ago.

Hi, Thank you. For the HK agreement on the face of it you cannot terminate without cause (i.e terminate for convenience) - you have a two year agreement and there does not appear to be any termination rights - so if you terminate the agreement you may be liable to damage incurred up to December 2017 - to the extent that a loss can be proved. Even if the other party cannot prove any losses, you will still have to pay any monies accrued and owing form operating the franchise. In relation to the international contract, has he served you with notice to terminate? Kind regards AJ

Customer: replied 3 months ago.
Hi Alex under the Hong Kong agreement there is a termination clause which says I can terminate without cause. If I do this with I still owe the outstanding monies? Can you please call he as requested to discuss today. Thanks
Customer: replied 3 months ago.
HI Alex can you urgently come back to me as your advice is not clear. Under the HK agreement I think I have the right to terminate under the termination clause.
It is the international agreement that is 2 years which I do not want to terminate. Please can you confirm:
1) If I can terminate without cause the HK agreement under the termination clause. I'm not sure why you are saying this is only a 2 year contract?
2) What my next steps are to get him to pay under the international agreement?
Expert:  Alex J. replied 3 months ago.

Hi, Thank you. My apologies you are correct, you have a right to terminate for convenience, I could only see the heads of terms but I have the full agreement now. As a starting point have you actually served one months written notice?

The reason why I am saying the HK agreement is only a two year agreement is because that is what is written in the heads of terms. There is a right to extend the agreement further.

Customer: replied 3 months ago.
Hi Alex, I'm not sure what you are talking about. There are NO heads of terms. There are 3 seperate agreements. One for international comms payments which was signed at the beginning of this year for 2 year term and is a one pager. The others are for the London and Hong Kong franchises respectively. I'm a bit frustrated that I'm having to point out the obvious and would appreciate a call to discuss as I need an answer and sound advice asap. Can you please come back to me as I need to know for certain whether I can terminate the HK agreement without cause and do not have to pay the outstanding amount for Hong Kong which Kevin is trying t set off. Can you confirm whether this is legally possible under the terms of the agreements? Thanks Helena
Customer: replied 3 months ago.
Do you have the 3 agreements? Can you confirm please? Otherwsie I will try someone else to answer my question. I'm not sure why this has taken so long when I was very clear and attached all the documentation. Thanks Helena
Customer: replied 3 months ago.
I have not given notice to terminate yet. We had verbally agreed that the remainder would be paid out of the proceeds of a future sale of the franchise.
Customer: replied 3 months ago.
He is now wanting to offset his payment to me under the international comms agreement under the amount outstanding under the Hong Kong which he hasn't enforced until now with verbal agreements it could have come out of extra comms generated under the Hong Kong franchise. I'd be very grateful if you can come back to me quickly or if I can call you please so we can deal with this very quickly. Thanks Helena
Expert:  Alex J. replied 3 months ago.

Hi. Thank you. The first point is I have all the agreements. If you can clarify one point - are the HK Franchiae agreements and International Comms Agreement intended to be mutually exclusive. In relation to the other points (1) there is a right to terminate for convenience (ie without cause) the HK agreement (2) there is no right of deduction set off or counterclaim under the HK agreement - it is therefore independent of the other Franchiae arrangement. This however will not force him to pay - if he exercise a right of set off with no contractual right to do so he is in breach of contract. The first step is has he sent you a written demand to exercise set off between the two franchise arrangements?

Customer: replied 3 months ago.
Hi Alex, Yes the agreements were intended to be mutually exclusive. Please note that the set off is not between 2 franchise agreements it is between the Hong Kong Franchise agreement and a separate agreement between him and me for the role of global director for which I bought the revenue stream for 2 years of international commissions form 22 offices globally and the half proceeds of a future franchise. Yes he has written to me to that demand to set off and we have had an ongoing exchange of emails about it. Basically the Hong Kong franchise wasn't really working out so we had verbally agreed to close it whilst I concentrated on the London and International business. The balance was never mentioned until a month ago when he said he needed the money to sort out his end of year accounts which shows the amount owing on the Hong Kong as a deficit.
Customer: replied 3 months ago.
Hi Alex, One other question is do the payment terms in the HK agreement ie to pay in full on the 15th paying member ( noting that we subsequently agreed that the remainder would be paid out of a higher commission percentage) supersede the 45 month payment terms in the London franchise agreement? Hope that makes sense. Helena
Expert:  Alex J. replied 3 months ago.

Hi, Thank you. Can you actually maintain your global director role without the KR Franchise? The problem is, as the two agreements are linked he may have grounds to try and argue set off and counter claim. Do you intend to pay the money you owe him within his payment terms?

Customer: replied 3 months ago.
Hi Alex, Yes I can maintain that although he has said he wants me to cease in the role at the moment until this is all resolved. He basically wants to do what he likes. H
Customer: replied 3 months ago.
This is my point - can he make a counter claim if I terminate the contract. What is the legal position please? I don't see how they are interlinked when they are 2 seperate agreements!
Expert:  Alex J. replied 3 months ago.

Hi, Thank you. If you terminate the HK Franchise on thirty days notice, then you will only owe him the monies accrued under that agreement up until the expiry of the notice period. There are no termination fees. In relation to the money you are owed under the other agreement there is no right of set off. If you refuse to pay him, then he may sue you for what he is owed. If he refuses to pay you for the other agreement then you will be entitled to sue him for breach of contract. If you entered into litigation with this person would you be able to continue working with him? Kind regards AJ

Customer: replied 3 months ago.
Hi Alex, Thanks for your advice. That is clear. I don't owe him any monies under the UK franchise agreement or Hong Kong agreement only the monies owed for the outstanding amount on HK. If I did agree to set off I'm trying to negotiate an extension on the international comms deal to offset the monies I will have lost over this period. Do you think that's fair and reasonable? What else would you suggest doing? I'm obviously concerened there have been no frnachsie deals made this year and I'm pretty heavily invested so trying to recoup as much money out of it as possible. Best Helena
Customer: replied 3 months ago.
Can you please clarify if I owe him under HK contract the amount outstanding as it was paying on the 15th member joining but we had agreed that this amount would be paid out of 30% comms rather than 20% and had been the case up until when we closed it in March. Best Helena
Expert:  Alex J. replied 3 months ago.

Hi thank you. I think you have to negotiate a set off (including terms that are favourable to you) - realistically if you sued him the relationship would break down beyond repair. In relation to your second point I am reviewing the contract now and will revert to you shortly. Kind regards AJ

What Customers are Saying:

 
 
 
  • Thank you so much for your help. Your answers were really useful and came back so quickly. Great! Maggie
< Previous | Next >
  • Thank you so much for your help. Your answers were really useful and came back so quickly. Great! Maggie
  • A quick response, a succinct and helpful answer in simple English. I believe I can now confront the counter party with confidence -- worth the 30 bucks! Rick
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
 
 
 

Meet The Experts:

 
 
 
  • Jo C.

    Jo C.

    Barrister

    Satisfied Customers:

    30316
    Over 5 years in practice
< Last | Next >
  • http://ww2.justanswer.com/uploads/EM/emus/2015-7-7_192327_bigstockportraitofconfidentfemale.64x64.jpg Jo C.'s Avatar

    Jo C.

    Barrister

    Satisfied Customers:

    30316
    Over 5 years in practice
  • http://ww2.justanswer.com/uploads/BE/benjones/2015-12-1_0437_ennew.64x64.jpg Ben Jones's Avatar

    Ben Jones

    UK Lawyer

    Satisfied Customers:

    11553
    Qualified Solicitor - Please start your question with 'For Ben Jones'
  • http://ww2.justanswer.com/uploads/BU/Buachaill/2012-5-25_211156_barrister5.64x64.jpg Buachaill's Avatar

    Buachaill

    Barrister

    Satisfied Customers:

    1754
    Barrister 17 years experience
  • http://ww2.justanswer.com/uploads/JO/jojobi/2013-3-19_0265_maxlowryphoto.64x64.jpg Max Lowry's Avatar

    Max Lowry

    Advocate

    Satisfied Customers:

    894
    LLB, 10 years post qualification experience
  • http://ww2.justanswer.com/uploads/UK/UKLawyer/2012-4-12_9849_F2.64x64.jpg UK_Lawyer's Avatar

    UK_Lawyer

    Solicitor

    Satisfied Customers:

    750
    I am a qualified solicitor and an expert in UK law.
  • http://ww2.justanswer.com/uploads/KA/Kasare/kasare.64x64.jpg Kasare's Avatar

    Kasare

    Solicitor

    Satisfied Customers:

    402
    Solicitor, 10 yrs plus experience in civil litigation, employment and family law
  • http://ww2.justanswer.com/uploads/OS/osh/2015-7-7_19268_gettyimagesb.64x64.jpg Joshua's Avatar

    Joshua

    Lawyer

    Satisfied Customers:

    8199
    LL.B (Hons), Higher Prof. Dip. Law & Practice