When three friends decided to pool their life savings and open a restaurant franchise, they never thought they would be misled and hoodwinked into financial disaster, teetering on the edge of professional and personal bankruptcy. After investing hundreds of thousands of dollars, our clients decided to open their restaurant in the location recommended by their franchisor, based on the cost projections provided by the franchisor, and upon the revenue projections of a franchisee that was recommended by the franchisor. After the franchise went 30% over-budget the franchisor.
Challenge:
Our clients signed one-sided contractual agreements, including personal guarantees, with no legal advice. Worse still, they started this business during a harsh economic climate that lead to a presentation that our clients were simply “in the wrong place at the wrong time” or a failure because of “mismanagement.” Throughout the case, creditors were beating down their doors and personal bankruptcy loomed as their only meaningful option.
Solution:
The Ayres Law Office was hired to review the economics, franchise law, contract and other restaurant issues presented to develop a successful trial strategy. While bearing the burden of proof, the solution of the problems in the case was really quite simple: our clients were the less experienced, less sophisticated parties relying largely on the advice and strategy of the national company who made this its daily business. A cohesive story was pitched from an initial cocktail party conversation to the time the doors of the restaurant closed – with each step demonstrating the guidance provided to our clients until their resources were drained and they could no longer pay, leading to the company abandoning them.
Result:
After contentious litigation, a settlement was reached and our clients’ were able to pay all outstanding debt owed on the venture and resume their normal lives, free of the threat of a looming bankruptcy.