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Sluggish Ex-spouse Gets Windfall

Some courts still don't understand the basics of franchising.

There has been discussion about the complexities of valuing a franchise for purposes of a divorce. But sometimes the parties, and their attorneys, don't even get that far.

Richard and Maureen Hawksley were married and operated two H&R Block franchises in Maine. When they divorced, the court ordered that one of them be given to Maureen and that the other (then valued at $112,500) be given to Richard.

Problem was... both of the franchises were in Maureen's name alone.

The divorce court ordered that  one franchise “be set aside to [the husband] as his sole property" but when the franchisor refused to transfer the franchise, neither the husband nor the wife went back in to court to fix the problem.

Ultimately the franchises were sold, and Richard got $150,000. Not a bad deal.

The interesting point here is how neither Richard nor Maureen, nor their respective divorce counsel, nor the divorce court Judge, understood that franchisor consent is necessary to transfer a franchise. This is similar to the Kahala v. Klutz case where the purchasers of a franchise didn't bother to make clear in the purchase agreement that they were buying a franchise as well as the hard assets.

Duh!

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Hawksley v. Gerow, ME Supreme Judicial Court, January 4, 2011

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