Franchise Fraud Lawsuit

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An investigation is underway into claims that franchisors misled franchisees and several franchise fraud lawsuits have been filed.

A franchisee invests in a business opportunity as part of a group that is linked to an established business. For instance, a franchisee would buy a fast food restaurant and be the owner of that business but operate under a franchise system in which it has obligations and benefits.

There are many franchise opportunities that are legitimate business opportunities and owning a franchise can be a lucrative way to enjoy the benefits of self-employment and business ownership without doing things “from scratch” or having to worry about marketing and establishing your business from the ground up.

Unfortunately, there are also franchise opportunities that are scams or that might be legitimate opportunities but they are being run by undependable franchisors that overstate the support and guidance franchisees will receive.

A class action franchise fraud lawsuit might be appropriate if a franchisor:

  • Misrepresented the amount of money franchisees could expect to earn
  • Underestimated the startup costs associated with investing
  • Forced the purchases of goods at an inflated price
  • Mandated payment for expensive advertising funds
  • Downplayed the amount of royalties due
  • Misrepresented in any way the obligations or benefits of franchise ownership

If you believe any of these criteria apply to your situation, you should speak to a franchise fraud lawyer.

What Should You Do If You Suspect Franchise Fraud?

If you suspect fraud has occurred, it’s important to:

  • Keep detailed notes of the situation, including a written diary of each event and correspondence or conversation you have with the franchisor
  • Avoid giving any recorded or written statements to the franchisor
  • Avoid destroying any information that could be pertinent to your claim
  • Organize a file that includes the franchise agreement, lease agreements, letters from the franchisor, earnings statements, and information regarding marketing, ownership, operation, or anything else related to the franchise
  • Contact a franchise fraud attorney as soon as you suspect there might be a problem

How Might a Franchise Fraud Lawyer Help You?

The idea of business ownership is appealing to many people, but the idea of starting a business from the ground up isn’t always practical. This is why so many people choose to invest in franchise opportunities.

Owning a franchise can be a fantastic way to experience business ownership, but there are franchise scams out there. If you believe you’ve been victimized, a franchise fraud lawyer can help.

If you believe the franchisor with whom you are working breached your franchise agreement, an experienced franchise attorney might be able to help you. The same is true if the franchise opportunity was misrepresented in any way.

Keep in mind, franchise agreements often contain terms regarding the time period in which franchisees can bring an action against a franchisor. Failure to comply with such deadlines doom your case from the start. An attorney experienced in franchise law can review your agreement and help you develop a timeline for taking action. He or she might also negotiate on your behalf.

Should I Contact a Franchise Fraud Attorney?

If you believe you have been defrauded by a franchisor, an attorney might be able to help you.

There are laws regarding franchise fraud that are designed to protect investors and potential business owners. Someone who has been a victim of franchise fraud might be able to file a claim for common law fraud and negligent misrepresentation. An attorney will need to review the franchise agreement, assess the overall situation, and speak to other franchisors, but if fraud seems likely there is a chance legal action might be appropriate.

To learn more or to speak to someone about your situation, contact us.





Since its establishment in 1999, Seeger Weiss has led some of the most complex and high-profile litigations in the U.S.