We ran into difficulties with our franchise and eventually had to close down. As we were closing down our retail premises we sent all of the left over products to the franchisor to use in their main retail store. However they are now refusing to pay us for the stock despite having profited from its use. Are we entitled to be paid for that stock?
Lawyer Answers (1): Answers from lawyers are general preliminary responses. They are not formal legal advice and cannot taken account of all your circumstances. They do not create a lawyer–client relationship.
Answer by LegalEagle™ Staff, Melbourne 3000 VIC
- This may depend on the terms of your franchise agreement and whether there are provisions governing return of stock in the event that your franchise closes down. However if you have paid for that stock already you should be entitled to payment for the franchisees use of the stock at least at cost price.
- Without knowing more about the specific situation it is difficult to say what your exact entitlements may be. If you are in debt to the franchisee for any outstanding fee amounts they may be entitled to hold that money.
- It is recommended that you seek the advice of a franchise lawyer who can advise you of your specific rights particularly if it is a substantial value amount.