Franchise Owners: Sell Your Judgment
A franchisee defaulted on royalties. A supplier dispute ended in court. We buy California franchise-related judgments — $10,000 and up.
$10,000 minimum · Commercial judgments · California superior court
Franchise judgment collection
Franchise systems generate commercial disputes at multiple levels: franchisors pursuing franchisees for unpaid royalties and fees, franchisees pursuing suppliers or co-franchisees for contract breaches, and area developers pursuing sub-franchisees for defaults.
Franchise judgment enforcement can be complex — the debtor entity (the franchise LLC) often has limited assets, while the principals who operated it may have more. The key is identifying what liability structure exists and where the money is.
What qualifies
We evaluate California commercial judgments in this category including:
- Unpaid franchise royalties — Franchisor judgment against a franchisee for unpaid royalty fees, marketing fund contributions, or other required payments.
- Franchise agreement breach — Judgment for breach of the franchise agreement beyond royalty obligations.
- Franchisee-to-supplier disputes — Franchisee won a judgment against a required or preferred supplier for breach of supply agreement.
- Area developer defaults — Area developer failed to meet development obligations; judgment entered for damages.
- Personally guaranteed franchise agreements — Franchisee principal personally guaranteed the franchise agreement; judgment includes the guarantor.
Minimum face value: $10,000. California superior court commercial judgments only.
Franchise judgment enforcement: a unique challenge
Franchise disputes produce judgments in a complex ecosystem — between franchisor and franchisee, between sub-franchisees and operating units, between operators and their branded suppliers, between franchisees and the landlords of the locations they operated from. The debtor entity is often a single-purpose LLC formed specifically to operate one franchise location. When that location closes, the entity that owes the judgment frequently holds nothing.
The cases we see most often:
- Single-purpose franchise LLC. Entity formed for one location, judgment entered after closure, no remaining assets in the entity itself. Whether collection is realistic depends entirely on whether the franchise agreement included a personal guaranty from the operating principal — most do. How we value a judgment explains the structure.
- Franchisee-to-supplier disputes. A franchisee stopped paying a branded supplier (food distribution, equipment leases, point-of-sale services). The judgment runs against the franchisee operating entity. Evaluate whether any guaranty captures the operator personally.
- Franchisor royalty judgments. A franchisee stopped paying royalties or fees owed under the franchise agreement; the franchisor obtained judgment. These tend to be well-documented and clean — the franchise agreement itself is the contract, royalty math is unambiguous, and personal guaranties from the franchisee operating principal are standard.
- Personal guaranty enforcement. Franchise agreements routinely include personal guaranties because franchisors know franchisee LLCs are often thin. Check whether the judgment captures that guaranty explicitly — if it does, the enforceable target widens significantly.
- Refranchising conflicts. Some franchisors hesitate to pursue hard enforcement against a former franchisee because they may want to re-license that territory to another operator. Selling the judgment removes that conflict — the buyer is not the franchisor and does not have the same go-forward relationship considerations. Related: commercial property owners with tenant judgments.
For more on what fits our scope, see the full list of options for collecting a judgment.
FAQ
The franchisee has closed their location. Is the judgment worthless?
Not necessarily. If the franchise agreement had a personal guarantee — which most do — the guarantor is still individually liable. Their personal assets are enforceable even if the franchise entity is defunct.
We have judgments against multiple franchisees in a failed franchise system. Can we sell them?
We evaluate each judgment individually based on that debtor’s profile. Submit them separately or together and we’ll tell you which ones meet our criteria.
The franchisee transferred the franchise before defaulting. Does that affect the judgment?
It depends on whether the transferee assumed liability and whether the original franchisee was released. Tell us the transfer history and we’ll analyze the liability chain.
Our franchise agreement requires arbitration — does that affect whether we can sell an arbitration award?
An arbitration award must be confirmed by a court (reduced to a judgment) before it is a sellable asset. Most California arbitration awards can be confirmed under CCP §1285 in a relatively routine proceeding. Once that step is done, the resulting judgment is evaluated like any other — see the types of judgments we buy.
The judgment is against both the franchise entity and the individual guarantor. Does that affect the offer?
Yes, positively. Dual exposure to entity and individual assets typically improves enforceability and increases the value we can offer. A judgment against only a dissolved single-purpose LLC is worth substantially less than a judgment that also reaches the operating principal as a personal guarantor.
Get your franchise judgment evaluated
Franchise-related commercial judgment, $10,000 or more? Free evaluation, one business day response.