QUESTION

My boss has been promising for two years to let me open a franchise of the company through him. What are my legal rights?

Asked on Feb 08th, 2012 on Franchise Law - Kentucky
More details to this question:
There was never a signed franchise agreement or anything. It was all verbal. He told me I could open a franchise and he would finance it 100% and not to worry about getting funds to open up. I did a ton of demographic research and we flew out together to two different locations to decide where to open the franchise. He sent me documents about revenue projections for my franchise and how the start-up money would be paid back to him. I even accepted a year long position across the country in another office of his because he told me "It will really help you for when you open your own franchise" and "This experience is necessary if we open an office together". I worked year round for the same amount of money I could have made in one summer (based on factual past income history). All my co-workers knew I was going to be opening a franchise. Out of nowhere, my boss gives the franchise to someone who has never worked for our company because "He has the financing to pay for it himself".
Report Abuse

1 ANSWER

Business Law Attorney serving Cincinnati, OH at Cors & Bassett, LLC
Update Your Profile
It sounds like you and your boss had an oral contract, but not a written one.  In most states, oral contracts are enforceable if they do not violate the statute of frauds in that state. In Ohio (I am not licensed in Kentucky where you are located; you will have to find out the Kentucky law on this matter of statute of frauds), a contract is enforceable even though it is not in writing UNLESS it will be performed in more than one year, or it is for the sale of real estate.  In your case, it appears that your contract to purchase a franchise was not able to be performed in less than one year, so the oral contract may not be enforceable. Another problem with oral contracts is that there are terms not stated in the original understanding, so it is not clear exactly what was promised. For example, in your situation, was there a promise that you would open the next granted franchise?  Or just that you would be able to open a franchise, at some time?  Was any time limit expressed?  There are ways to enforce a contract that may be voidable because of statute of frauds issues if partial performance has begun.  It appears that you changed your employment in reliance on your boss's promise to grant you a franchise, and therefore you performed part of your part of the bargain.  This doctrine is also called justifiable detrimental reliance.  You relied on your boss's promise.   There are several theories available to you to permit you to recover damages or to obtain a franchise in a lawsuit against the company, or against your boss.  You must consult an attorney to represent you and to determine after hearing all the facts of your case whether you can succeed in a lawsuit to obtain what you want - a franchise agreement with the company. In addition to contract questions, in the sale of a franchise, a prospective franchisee must be given a Franchise Disclosure Document that complies with federal franchise law.  If your employer is not complying with federal franchise law, then any franchise your employer grants is subject to rescission by the franchisee and in addition, your employer may be opening itself up to violations of state law in the sale of its franchises. I am an attorney licensed to practice law in the state of Ohio.  I am not licensed in the Commonwealth of Kentucky or any other state.  This answer is intended to give general legal information and is not intended to give legal advice on your specific situation.  More information would be needed in order to advise you on your specific situation.  No attorney client relationship is established by my answer to your question.
Answered on Jun 15th, 2012 at 3:56 PM

Report Abuse

Ask a Lawyer

Consumers can use this platform to pose legal questions to real lawyers and receive free insights.

Participating legal professionals get the opportunity to speak directly with people who may need their services, as well as enhance their standing in the Lawyers.com community.

0 out of 150 characters