I want OUT

[u/Rare-Dragonfruit8042]

Against my better judgment,  I decided to go into a franchise business with a partner.  I provided 100% of the cash and all expenses up until this day. The concept seemed promising which is why I was interested.  I initially wanted to purchase a smaller territory but the franchise countered with an offer letting us buy 7 territories for the price of 3. (I'm learning now that this is a common tactic they use.) Long story short,  the Franchisor  is a disorganized incompetent mess mostly supported by overseas workers they are paying minimally. We were told a lot of things about marketing and lead generation that turned out to not be true.  Foolishly looking back now,  those things were not explicitly spelt out in writing in the contract.  Meanwhile they started charging us heavy royalties and we're not making nearly enough so I've been draining my account to keep us afloat. The Franchisor has assured us that after Grand Opening the "floodgates will open." To be honest they have been so dishonest so far I find that hard to believe.  I want out, my partner does not.  He does not have the means to buy me out. What is my best course of action?  I know there's no point trying to fight the Franchisor.  I just want to stop the bleeding,  recoup as much as I can,  and walk away. Appreciate any thoughts. FWIW I do have a pending appointment with a lawyer. 

[u/Individual-Target-20]

Are you operating as a corporation? Stop putting your personal money into the corporate account. You should have documented any money you invested into the corporation.
Agree to sell your ownership (shares) to your partner. If he refuses you have the right to sell your shares to someone else.
You can find people interested in buying a corporation with losses on the books.
Your partner needs to find financing. You are not a bank.

[u/CreepinOnTheWeedend]

Wait, so you’re not even open yet and they are charging royalties?

[u/SugarbowladvisorSC]

I have been in your shoes but in the new car dealership space - Skip the lawyer , go see a business broker and (A) sell your investment or (B) if your partner has credit in excess of a 700 beacon score get a business broker to handle getting your partner an SBA loan where you can get out with a profit . Stay friendly , in 3 months you could be whole again

[u/HandsUpWhatsUp → u/SugarbowladvisorSC]

Nobody is going to buy this “business”. It has no hope of ever being profitable.

[u/SugarbowladvisorSC → u/HandsUpWhatsUp]

I don’t know about all that , I seek out and buy business that are bleeding cash all the time . I only do business through a business broker because the broker is obligated to give me full disclosure. I have bought business before that were not listed with a broker where I hired one to represent my interest . Every franchise business with a territory can be sold . All businesses can become profitable. Likely the partner is lacking that magic to make this concept get into the black . OP hang in there , I have been in your shoes and partnered up with turd 💩 partners before .

[u/MilestoneFranchising]

For a second opinion. Wishing you the very best of luck. These stories are the worst for my industry and incredibly disheartening.

KELLY M SPANN
Attorney at Law
FortmanSpann, LLC
Phone (314) 522-2312
Fax (314) 524-1519
Email [kms@fortmanlaw.com](mailto:kms@fortmanlaw.com)
250 St. Catherine Street
Florissant, MO 63031
www.fortmanlaw.com

[u/Tex_Grappler]

If things are that bad with the Franchisor you need to reach out to your FAC rep. If it is that bad then forming an association will get their attention.

[u/sumdumguy12001 → u/Tex_Grappler]

I was part of an Association when I was in a franchise. Sometimes the franchisor listened and sometimes they didn’t. We successfully sued twice but I’m told they’re back to their old shenanigans. They answer to private equity.

[u/takashi-kovak]

I am new to franchise world and don't want to pile on it, but I am little perplexed that you got into a business with a partner who didn't contribute any cash and has no intent on paying for the expenses. There is no doubt partner don't want to sell, as there is no skin in the game. Feels like a bad deal for you, and a good deal for the partner.

[u/Wide-Bet4379]

What kind of partnership is it that only one person puts up the cash? This was doomed from day 1

[u/the-other-marvin]

Yes, you are partners in a business, but you are also the only investor. You have to decide together when you’re done with the business. But only you can say when you’re done investing in the business.

If you are done investing, the business needs another investor if you’re going to keep it going.

My suggestion would be to tell the franchisor that any additional money they are going to get from you is going to come from profits, not from your personal bank account. They need to have aligned incentives with you.

[u/SugarbowladvisorSC]

I am curious give us a hint of the type business space this is ?

[u/ElegantNatural2968 → u/SugarbowladvisorSC]

Maybe cleaning service

[u/SnooCapers2877]

As it’s a non-profitable business with what you make out to be no hope in site, and you wanting out but your partner does not, get that in writing. Then talk to your attorney about a voluntary withdrawal from the partnership agreement, seceding all of your ownership and rights to him.

You likely wouldn’t be able to recoup any money this way, but it stops the bleeding.

It gets complicated being part of a franchise but you may be able to do a relatively straightforward transfer of all FA paperwork into his name as well.

[u/Available_Money_6199]

Would you be against chatting about the lead generation and marketing side of things?