| T O P I C R E V I E W |
| introuble |
Posted - 10 June 2008 : 14:08:44
Hi,
Another question. I am in a Franchise which basically says that if I declare bankrupt then I have to pay the amount of any remaining royalties. I pay a monthly fee for the privelage of using the companys name etc etc.
This is a rolling payment am I right in assuming that the Franchise could not try and claim the money further down the line as they classed like a creditor like all the rest. I appreciate that the full terms of the agreement are not known to you but just wanted to ask the question in theory?
I am not looking at carrying on the business under a different name or anything.
Darren |
| 6 L A T E S T R E P L I E S (Newest First) |
| melanie_giles |
Posted - 10 June 2008 : 23:30:18
Any royalty monies you may receive post-bankruptcy, will firstly be caught by the estate for the benefit of all creditors, so I feel that contractual clause would be unenforceable given that it cannot override statute.
For an informal chat about any financial difficulties, or advice as to the options available, I can be contacted via my website - www.melaniegiles.com |
| introuble |
Posted - 10 June 2008 : 17:13:24
Hi Porcorosso,
That is an interesting point about the writing off against Tax. |
| Porcorosso |
Posted - 10 June 2008 : 15:22:45
If they maximise their claim will this not help them either in respect of the amount of any monies paid to them via the OR. Or perhaps it helps them write off against tax?
The ostrich has taken his head out of the sand. |
| JulianDonnelly |
Posted - 10 June 2008 : 14:32:36
Hi Darren,
That looks like a fairly standard franchise contract to me. BR would see you walking away free, but I would suggest you have a conversation with the Licensor and get written confirmation of what they will (or won't) do once you've gone BR. I can't see that they have any legal recourse except to terminate the contract and walk away.
Regards
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk |
| introuble |
Posted - 10 June 2008 : 14:30:25
Hi Julian,
Basically the agreemt says:
Upon the Termination for any of the above (above being declared Bankrupt)the Franchisee shall immediately pay to the Franchisor the full amount of all monies including future royalties then or thereafter due together with any interest thereon up until the date of the payment.
This to me does not make sense as if someone is declaring BR then they obviously do not have the money to pay.
There are other items in the above sections ie to stop people just stopping the agreement and trying to walk away with no consequnces and to also stop people stopping and setting up on their own.
Surely if they tried a legal approach then a court would not be able to set an order unless they deferred it pending increase in income. Also if I paid them then would this not also be seen as a preferential payment.
Do you know anybody that may be able to advise on this?
The franchisor is fully aware of my situation and to be fair to them I don't think they would try and come after me for the money.
Darren
|
| JulianDonnelly |
Posted - 10 June 2008 : 14:11:08
Hi Darren,
As a franchise is a business which has a value, the OR could possibly see if there is a realisable value. It is not uncommon for Franchise contracts to have a clause revoking the agreement in case on BR.
Your assumption is correct that they would be treated like any other creditor. However, to be sure, I would get a decent franchise lawyer to take a look at the agreement just in case.
Regards
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk |
