CNNMoney:
Question:
I bought a franchise from a guy who verbally told me the business would do X dollars every month. I now realize he upsold his store, as the sales have been 30% less than he showed me. He also owns the POS (point of sale) system for the company, so any numbers he shows could have been modified to sell his store to me. What are my options? I am out of funds and have not earned a penny in income since purchase. - Brett, Rancho Cucamonga, Calif.
Answer:
Find a franchisee-specific attorney, says Larry Beck of the American Franchisee Association, the industry’s Chicago-based national trade association. The group’s website contains several links to attorneys specializing in franchisee cases.
Begin by determining if what you purchased was a true franchise, says attorney Bruce Napell, a partner at Singler, Nappel & Dillin LLP in San Francisco.
‘Basically, a relationship is a franchise if it passes a 3-part test,’ he says. First, does the business operate under substantial identification with the franchisor’s mark? ‘That could be as obvious as calling yourself ‘McDonalds‘ or simply selling a product with someone’s name on it,’ says Napell.
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