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Log In / Register | Aug 14, 2018

franchise changed owners and things went south

My franchise was picked up by a franchise company, after being developed by an educator. Over a decade later, she wanted the franchise to herself, and bought it back. That was 3 months ago. Before, we were not being held to a minimum monthly fee, but now, they want us to begin paying a minimum monthly of $900. Before, they asked for just a marketing free of 7% and franchise fee of 3%. So, 10% of our earnings was the royalty to the company. So, this month, I made only $500. I provide services at schools, and I was invalid for four months, so no business. I just got an email from the owner saying I owed another $870. Needless to say I was upset. I emailed back that I needed to dump the business if this was their new approach. Then, the lady who developed the business called me and was very sympathetic, but insistent that we need to pay extra money now, because the business costs them so much to run. How is that my fault?

So, here is the pickle. I cannot afford this. I have limited buiness income as it is, and she is saying this will give me incentive. I work the business a lot, and it is just not working because I started on a shoestring. I spent all my reitrement savings and put myself into debt to tune of $60K to start this up. I had my car repossessed because the franchise does not make as much as they claimed it would make, in the first place, and I banked on earning more, using credit cards to support my household. It never paid off, and now I believe I will have to file bankruptcy. The new owner sent pictures of her daughter's bat mizvah in NY City in this gala suite - I'm sure it cost o ver $50,000. She literally had to ask me what bankruptcy meant. She has no understanding, period, of what it is like to struggle. So, here I am, no income and they want $900 a month. If I don't earn $900 in royalties (the 10% previously mentioned) I have to pay $900 anyway.

Do I have any recourse at this juncture? I signed a piece of paper which asked me if there were things promised, and I sent them a detailed email stating I was promised to earn more, in the first year -- which is true- and that I have gone broke because I have not earned that much. I have worked this program just like they say to, but the income is very sporadic and does not pay off until you have multiple locations and multiple staff hired. I have not been able to build the program out without operating capital.

Can I just quit? What can I do?


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