It has been widely reported that franchisee loan defaults rose significantly in 2007 and 2008 . One may expect that trend to continue as the economy continues to suffer. Because of the complex terms and varying obligations contained in modern franchise agreements, a financially stressed franchisee should obtain experienced legal advice before attempting to resolve his or her business problems. Some points to consider should be:
- Is the business plan of the franchise model still workable ?
- If available, would the infusion of additional capital be a prudent plan of action ?
- What forms of relief are available from the franchisor ?
- Is the franchisee currently in breach of its franchise or other agreements ?
- Is there more than one franchise unit owned or operated by you ?
- Has the franchisor acted in a way which significantly contributed to the financial distress of your business ?
- Will the business’ seeking protection under the Bankruptcy Code provide a meaningful solution ?
Learning what options may exist can be very helpful in choosing how to deal with your financially stressed business.
 Richard Gibson, Defaults by Franchisees Soar as the Recession Deepens, New York Times (February 24, 2009).