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The facts are definitely suspect, and worthy of further investigation. Based on the circumstances you described, it sounds like you could potentially have a case for misrepresentation or fraud. Here's why:
Misrepresentation: If the franchise or the previous owner gave you false information about the state of the business before you purchased it.
Fraud: If the franchise or the previous owner deliberately concealed material facts about the business that they had a duty to disclose to you (such as the previous bankruptcy or the loss of equipment and clients), that could potentially be fraud.
Breach of contract: The franchise failed to meet its obligations to you as a franchisee.
A lot will depend on the actual correspondence, franchise agreement, and other representations made by the parties. (Please note that contingent claims are a part of the bankruptcy estate, so I would recommend speaking to us before you file. If you've already filed, I would make your bankruptcy attorney aware of a potential claim against the franchisor.)
I would recommend speaking with us to determine if you have a case. Please ask for a consultation with David Hannum, partner at the firm, for a franchise dispute who as particular experience in this area of law. You can reach us at (303) 688-0944.
