Snap Fitness Franchisee needing Serious Help

[shortfu]

What is the name of your state (only U.S. law)? CA

Here is my situation: I bought a Snap Fitness Franchise gym. I thought I did all my due diligence. I formed an LLC and signed everything as a principle member under the LLC. However, there was personal guarantee page that I signed stating that "the undersigned, individually, or jointly, hereby agree to be personally bound by each and every condition and term contained in the franchise agreement." No question this was total careless stupidity on my part. Now I'm hit with some personal bad luck that hurt me financially. I cannot continue to operate the gym. I still have 9-year lease contract with Snap Fitness. They said I may be held responsible for for average monthly month fee x 12 months x the number of years remaining on my lease contract.

Also, when I first bought the gym it was operating at a loss. I believed I could bring up the memberships. It is still operating at a loss. I'm having a nervous breakdown because of this. I'm afraid that I might lose my home (and more) as a result of this. I consulted a lawyer already. He said I can't declare bankruptcy because I have too much assets. The advice he gave me was sell the gym to release me of the liability but this is not a guarantee that I could sell it.

Anyone ever dealt with Snap Fitness or similar situation, please help. I really don't know how I can get away from it.

Sincerely,
Distressed Snap Fitness Franchisee

 

[FlyingRon]

I formed an LLC and signed everything as a principle member under the LLC.

That's principAL member.

However, there was personal guarantee page that I signed stating that "the undersigned, individually, or jointly, hereby agree to be personally bound by each and every condition and term contained in the franchise agreement." No question this was total careless stupidity on my part.

That is why you should have had an attorney and you likely need one now. Note that it's quite possible you would not have been issued the franchise without such a statement. Businesses are generally not foolish enough to enter into assetless shell LLCs without binding the principals. You could have just walked from the fees to to them, as you apparently intend to do.

We can't read the franchise agreement nor do we know what you assets and liabilities are other than the franchise, so we are not party to any more information than your attorney has. Other than continuing to operate the business or selling it to some other sucker, your only other option would be to negotiate the closure with the franchisor on terms less than the requirement fo fullfill the rest of the lease term.