Left with a worthless franchise

Embarasedandpoor

I would like some advice please.
I did my due dilligence and bought into an existing franchise which extolled itself as a leading company in the field and promoted the longevity of the company.
I was introduced to a number of people to help obtain start up funds for a 5 year period. Initially, I was informed it would take a number of months to establish myself. Projected revenues were predicted over the length of the franchise.
After 6 months and no income or leads, the sole Director announced  he was resigning to take up another role with a larger company. The new director's name and only an email address  were given.
No contact has been made by this person and I am left with a large debt to repay. The former director asserts it is not his problem now. He threatened an IVA if I pursue him. Additionally, the website was cloned for the new business. I have paid for legal advice but to no avail - What can I do ?. Action fraud were not interested. Any advice would be most appreciated.

Brie

Don't know really anything much that could help except to say that as far as I'm aware no one can threaten you with an IVA.  You'd need to sign up to that yourself.  Or do you mean that he has threatened to sign himself up for an IVA?

I have seen people on local social media sites naming and shaming those who engage in shoddy business practices.  Never know how successful that actually is in recovering anything but would guess there's a certain satisfaction in making things public.  

If you were in this as a business rather than as an individual there may be something that could be done with the help of an accountant perhaps that would allow you to walk away from the debts.  Must admit that's something I've never assisted with or advised on.

user1977

Embarasedandpoor said:

I have paid for legal advice but to no avail

Meaning what? Have you received legal advice? Unclear from what you've said where liability for the debts ought to lie. Or where any fraud might be.

Grumpy_chap

Embarasedandpoor said:

I would like some advice please.
I did my due dilligence and bought into an existing franchise which extolled itself as a leading company in the field and promoted the longevity of the company.
I was introduced to a number of people to help obtain start up funds for a 5 year period. Initially, I was informed it would take a number of months to establish myself. Projected revenues were predicted over the length of the franchise.
After 6 months and no income or leads, the sole Director announced  he was resigning to take up another role with a larger company. The new director's name and only an email address  were given.
No contact has been made by this person and I am left with a large debt to repay. The former director asserts it is not his problem now. He threatened an IVA if I pursue him. Additionally, the website was cloned for the new business. I have paid for legal advice but to no avail - What can I do ?. Action fraud were not interested. Any advice would be most appreciated.

We'd probably need more information to provide meaningful comment.
It will be very difficult for a forum to give you better advice than the paid for legal advice.
What was the paid for legal advice to cover?
What question did you ask the legal advisor?
What does the outcome "to no avail" mean?  That the legal advice failed to give you an answer?  That the legal advice failed to give you the answer you want?  That the legal advice was that there is no case to pursue?

lincroft1710

Your post lacks so much info.


Can you not try to get leads or drum up business yourself?


What sort of debt? Loans or have you just spent a lot of money on buying into the franchise or buying stock/equipment?


I am presuming that the "legal advice" was that there is no-one responsible for your current predicament whom you could successfully sue   

Embarasedandpoor

Thanks for your replies:

The franchise was for 5 years and cost £20k + VAT using a business start up loan. An associate of the ex Director, gave advice on obtaining the loan and produced projections of potential future earnings and was paid a fee for his input.When questioned about if  the company closed , he stated it was likely the loan would be written off.
The Solicitor  and a Barrister were consulted and after initial correspondence with the ex Director felt there was no guarantee I would win as who do you pursue for breach of contract etc. This was also likely to incur further expensive legal costs. If the new Director was pusued, there would be no money in the company as it is not generating any income. The new Director lives in Spain and has not been contactable and does not have experience in this particular field of consultancy..
The ex Director intimated he would apply for an IVA if pursued for any money. I contacted the start up company and was informed that the loan is underwritten by myself. I am considering a civil suit against the ex Director. 
Any advice would be welcome.

DullGreyGuy

Take the advice from your paid legal professionals, they have all the details and ultimately PI insurance if their advice is wrong.

user1977

What professional advice did you get when you bought into it originally? You said you carried out due diligence - what was that?

lincroft1710

Given what you have posted so far, my advice would be if you can't generate any business, to go out and get a job as you will need to generate income to pay off the loan. I am presuming that the the loan interest rates are not usurious.

Grumpy_chap

Embarasedandpoor said:

The franchise was for 5 years and cost £20k + VAT using a business start up loan. An associate of the ex Director, gave advice on obtaining the loan and produced projections of potential future earnings and was paid a fee for his input.When questioned about if  the company closed , he stated it was likely the loan would be written off.

How did you get introduced to the "associate"?
Who paid the fees for the advice provided by the "associate"?
What is the status of the "associate"?  Professional qualification / independence / professional indemnity
How was the advice given about the loan being written off if the company closed?
Exactly what was this advice about if the company closed?

It may be a long shot, but there may be a potential claim against the "associate" if they gave erroneous advice.

Embarasedandpoor said:

The Solicitor  and a Barrister were consulted and after initial correspondence with the ex Director felt there was no guarantee I would win as who do you pursue for breach of contract etc. This was also likely to incur further expensive legal costs.

I am considering a civil suit against the ex Director. 

Was this paid for advice from two legal professionals?  A Solicitor and a Barrister? 
It is unusual for matters of this nature to be handled by a Barrister.
You should follow the advice of the legal professional whom you have engaged over and above any advice from less informed contributors to a public forum.

How does the civil suit against the ex-Director vary from the claim for breach of contract which the legal professionals engaged have advised against pursuing?

Embarasedandpoor

Another franchisee and myself consulted a solicitor who had experience dealing with franchise issues. The solicitor had dealt with the ex Director previously for another franchisee dispute. They also asked the Barrister's advice on this case. Obviously this incurred fees.
The legal advice essentially warned that costs could escalate substantially if I pursued the case further.
The breach of contract would have to be against the company which appears to have no monetary assets and an uncontactable new Director.
The associate or the company he is attached to, does not appear to be regulated by FCA. He received 10% of the total franchise fee from the ex Director and verbally stated that it would be unlikely the GCBF would pursue me if the company ceased trading. He had prepared spreadsheets on projected earnings over the term of the franchise.