Business Franchising Issue

I would like to seek your legal advice about Franchising business here in the Philippines. I am a franchisee of salon business but the salon is not earning. The franchisor wants me to pay the monthly royalty fee, which I cannot do, as the business is not earning. I wanted to close the business, do I still need to pay the franchisor's royalty fee even though the salon is not earning? I need your help. Please advise what should I do about it?

Lee.Anne wrote:do I still need to pay the franchisor's royalty fee even though the salon is not earning?

What does the contract say about that?
Does it have a minimum time limit, which you haven't reached yet?

Rather many franchise are just "scams" (but not in legality point of viiew) ment to make only the headquarter earning,
while other franchises REALY try to assist the franchisees to earn them too.
But it's common the good ones TOO have a minimum monthly fee to avoid a bad/not earning franchisee occupy a district. ( I have no idea if your franchise is good, bad or if you just have bad location.)

There is no contact between me and the franchiser, I mean, there is a contract but the franchiser forgot to bring it during contract signing, so we do not have contract. I don’t know the whole details of the contract. All I know is, it’s a 5 yrs contract and 10k monthly royalty fee. I was so excited to have my own salon and forgot about the contract. Now, I'm having a hard time dealing with the Franchiser. There is no assistance coming from them. They will just visit the salon if they need to collect their royalty fee. I am so disappointed; I felt I was fooled by them. I want to sue them.

Lee.Anne wrote:There is no contact between me and the franchiser, I mean, there is a contract but the franchiser forgot to bring it during contract signing, so we do not have contract. I don’t know the whole details of the contract. All I know is, it’s a 5 yrs contract and 10k monthly royalty fee. I was so excited to have my own salon and forgot about the contract. Now, I'm having a hard time dealing with the Franchiser. There is no assistance coming from them. They will just visit the salon if they need to collect their royalty fee. I am so disappointed; I felt I was fooled by them. I want to sue them.

Oh no contract !
I don't know if Philippine law count just talked agreements same strength as wriitten (but harder to proove).
If it's don't counted when not signed, then you can just skip it, but I suppouse you CAN'T skip it because it isn't signed.

What did they tell about assistance?
If they told some, then you can claim THEY broke the contract FIRST. If the justice system agree with you, then you can just skip paying.

An other question is if suing them. How much have you paid them?
IF they think of suing you for stop paying them, then it can PERHAPS be best to sue them FIRST Perhaps that add chance they want to reach agreement outside court. But that can be both good and bad.
/Perhaps they WOULDN'T sue you otherwice.
/Or perhaps they get angry and sue you, although they had skiped it otherwice,

Lunkan wrote:
An other question is if suing them. How much have you paid them?
IF they think of suing you for stop paying them, then it can PERHAPS be best to sue them FIRST    Perhaps that add chance they want to reach agreement outside court. But that can be both good and bad.
/Perhaps they WOULDN'T sue you otherwice.
/Or perhaps they get angry and sue you, although they had skiped it otherwice,

I paid 350k for franchising fee but my total expenses exceeded to 1M (it includes the renovation, salon accessories and equipment).  Their attorney sent me letters, demanding me to pay the said royalty fees.

Lee.Anne wrote:

Lunkan wrote:
An other question is if suing them. How much have you paid them?
IF they think of suing you for stop paying them, then it can PERHAPS be best to sue them FIRST    Perhaps that add chance they want to reach agreement outside court. But that can be both good and bad.
/Perhaps they WOULDN'T sue you otherwice.
/Or perhaps they get angry and sue you, although they had skiped it otherwice,

I paid 350k for franchising fee but my total expenses exceeded to 1M (it includes the renovation, salon accessories and equipment).  Their attorney sent me letters, demanding me to pay the said royalty fees.

Oh that much.
How long time since you opened?
What's the results month per month - any improvement? (Count BEFORE the monthly fee is paid.)

Answer the attorney in writing and deny it, telling because they have broken the deal. (If they have. You didn't answer if they promised something, which they haven't fullfiled.)
What did they promise to get 350k ???

It’s operating since 2014. Our sales is always Negative. I don’t know how to cover my losses. I’m planning to sue them for the stress they gave and lack of support to us.

Lee.Anne wrote:It’s operating since 2014. Our sales is always Negative. I don’t know how to cover my losses.  I’m planning to sue them for the stress they gave and lack of support to us.

Oh. (Even negative if not pay the Franchise fee?)

Negative because of
/to few customers?
/Borrowed invested capital? What's the interest costs and what's the paying back of borrowed capital?
/or what?

Before you became franchisee - What did they told in texts/said they will assist with? =What did you pay 350k for?