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Ask Buachaill Your Own Question
Buachaill, Barrister
Category: Law
Satisfied Customers: 10944
Experience:  Barrister 17 years experience
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I have made a very stupid and big mistake and 'invested' a

Customer Question

I have made a very stupid and big mistake and 'invested' a largish sum of money in a Franchise. It has quickly become evident that the Franchisor is not offering the majority of the support they promised, that the claims made in the sales patter were totally fabricated and that the 'owner' appears to have no money left to address this.
Other franchisees have started legal proceedings but I am wondering if there are any grounds to do so given it was ultimately my own stupidity for not doing enough due diligence.
I guees the real question is whether the fabricated selling points represent mis-selling and even if so would there be much point pursuing someone who has no cash?
Submitted: 3 years ago.
Category: Law
Expert:  Buachaill replied 3 years ago.

1. At the outset, you need to realise that if one party to a franchise agreement, or to any agreement, makes a misrepresentation in the course of negotiations, then that misrepresentation is actionable. Here, it appears manifest that the franchisor made actionable representations as to the level of support which would be offered to each franchisee and as to his or his company's level of financial support for the overall business. These representations were false. So they adversely affected the running and value of each franchise. YOu cannot fabricate selling points without there being legal recourse.


2. The second point about whether there will be any recoveries should you seek to go through the judgment process is more difficult. Here you need to find out what assets this owner of the whole business which has been franchised has. It may be that they are small and you might be better coat-tail on the legal actions of other franchisees, so if they get a judgment, it will act as a precedent for the settlement of yours. Ultimately, it may be that the business which was franchised will be wound up, in which case, each claimant will merely get so many pence in the pound. But you should also look at the assets of the owner of the business because this might be only one of several businesses he may have. So there might be more to recover.