Contact Us for Franchise Debt Settlement Strategies In the Denver Area
In theory, the franchise model should work very well. That is, if you trust the ownership behind the business model. We can all think of franchises that have thrived for many years, such as McDonald’s, ACE Hardware, and Dunkin’ Donuts. However, not all franchises are destined for success.
As an entrepreneur, this is a risk you’re willing to take. But that doesn’t mean that you should be trapped in debt if your franchise fails and your franchisor and other creditors’ fees are unfair.
Too often, the promises made by the franchisor lead to financial decisions that, when the business doesn’t perform as claimed, lead to debt for you, the franchise operator.
The Wink Law Firm helps franchisees like you with the many forms of business debt you may be experiencing, including:
- SBA EIDL (Economic Injury Disaster Loans).
- Merchant cash advances (MCAs).
- Franchise financing and other fees.
- Business leases.
If you’re struggling with business debt, our debt relief attorneys can help you get back on your feet and put that too-good-to-be-true franchisor in the past and move on to new and more lucrative ventures. Schedule a free consultation to share your story with The Wink Law Firm, and our debt settlement team will draw up an effective legal strategy to get you the relief you need.
Our Solutions for Failed Franchise Debt, Including Relief from Franchise Fees
The Wink Law Firm can provide a solution for the unfortunate amount of debt that you may have piled up as your business struggled.
Here is the approach we take to provide debt relief from your creditors:
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Merchant cash advance (MCA) debt: Although your MCA may have been beneficial in the short term, a lender that’s willing to let you borrow against your future sales at extremely high interest rates is committing something more like usury than offering a fair lending program. However, MCA lenders are often within their rights. These companies can typically get a judgment against you to place a lien on your accounts receivable without even serving you because some states have decided to appease lenders at the expense of people’s constitutional right to due process.
What we recommend: Our debt settlement attorney typically recommends a negotiation in which our clients typically end up paying 50% of the balance in a lump sum. That means more money and your pocket that doesn’t go to your creditors. If you aren’t able to pay this sum right away or in less than two years, bankruptcy may be a more cost-effective option.
When you are personally liable for your business debt, our debt relief lawyer typically recommends personal bankruptcy over the high fees of business bankruptcy. This is because business bankruptcy doesn’t remove your personal liability for business debt that has been guaranteed by you. Most MCAs are personally guaranteed, so you are responsible for the debt as an individual, even after franchise operation ends.
If your household income is under Colorado’s median income (also known as the Colorado “means test”) you may be able to dissolve your MCA debt completely in Chapter 7 bankruptcy. Otherwise, another cost-effective solution is to enter a three-to-five-year payment plan in Chapter 13 bankruptcy, after which the rest of your debt is relieved.
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Franchise debt and fees: You may have allowed your franchisor to finance your debt to pay for operation costs, equipment, your monthly lease payment, and more. Most franchisors also charge an initial fee as you take on franchise operation, legal fees to execute the franchise agreement, royalties from your sales, and marketing fees. Each arrangement is somewhat different, although one common theme remains: if your franchise fails, you are personally liable for the debt because you guaranteed the obligations in the franchise agreement.
What we recommend: As with MCAs, you are personally liable for your debt, even after
your business dissolves. It is possible that you can settle your debt in a legal negotiation
with your franchisor, but this requires the skill of a strategic, experienced lawyer.Your franchise debt is also similar to an MCA during this negotiation because you will likely need to offer a lump sum. This lump sum is typically 50% of what you owe. If this lump sum isn’t possible right away or in less than two years’ time, our debt relief attorney recommends Chapter 7 or Chapter 13 bankruptcy. Again, much like an MCA, your eligibility for Chapter 7, and immediate dissolution of your debt, depends on whether you are under the income threshold for the state of Colorado. If not, Chapter 13 is also an effective option to repay less than you initially owed.
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EIDL loans: SBA EIDL loans were administered during the COVID-19 pandemic to help businesses survive lockdowns, supply chain shortages, and sparse attendance in indoor spaces, like restaurants. These loans are now coming due for many business owners, including former franchisees whose businesses have closed. However, there has been much confusion about whether Colorado
residents are liable for their EIDL loan debt.
Our SBA loan and EIDL loan resource clarifies who is likely to be personally liable for
their EIDL loan:- If you are a sole proprietor
- If your business has a traditional SBA loan
- If your business took out an EIDL loan for more than $200,000
What we recommend: Some franchisees operate their businesses as sole proprietors.
Sole proprietor status is a good reason to contact The Wink Law Firm for a free
consultation about what to do next.Whether the Treasury will collect on SBA EIDL loans has become a political issue that has continually evolved over the past few years. It’s challenging to follow the back-and-forth that determines what comes next for these loans’ repayment. If you have any concerns about EIDL loan repayment, this is another strong reason to seek out our debt settlement team.
For those who are personally liable for their EIDL loan under the aforementioned criteria, our debt relief lawyers can help you negotiate an offer in compromise, which may provide forgiveness for your loan. The Wink Law Firm excels at offers in compromise for government entities like the IRS and the SBA. We will help you find a settlement outcome where you keep the most money in your pocket, while satisfying your creditors.
Get Free of Your Franchise Fees with Our Debt Relief Team
Franchisees with debt trouble all experience different circumstances that require unique solutions. Our debt relief attorneys can navigate any one of these circumstances to get you the best possible debt settlement resolution.
We have the legal knowledge and targeted strategies that have the power to alter the course of a business debt spiral. Book your free consultation to get started with our debt relief lawyers, so you can move past your franchise challenges and find freedom from debt. Contact us online or call us at (720) 523-0620 to get debt relief now.