If I am an employee to a franchised business and the franchise I worked at closed suddenly, does the franchisor have any responsibility to pay us?

UPDATED: Sep 30, 2022

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If I am an employee to a franchised business and the franchise I worked at closed suddenly, does the franchisor have any responsibility to pay us?

I work for a company that has many locations and one of them closed suddenly with no warning. We are owed our last paycheck and have not received

it yet, 1 week past the pay period. There is a head franchise office, the main

location. Is that creator of the company responsible in any way? How do we get

our money?

Asked on March 12, 2016 under Employment Labor Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

The main office is probably not liable for your paychecks--usually, each franchise location is solely liable for your its own payroll, and the franchises are specifically set up that way to insulate the main office/franchisor from liability. Being a franchisor does not automatically make you responsible for your franchisee's obligations. You should contact the labor deparatment to file a payroll complaint; if they can't help you, trying filing a lawsuit vs. the franchise location and its owners. (Depending on how the franchise was legally structured--e.g. if it was an LLC or corporation--the owners may not be legally liable, but it's worth naming them; let them prove they are not responsible.)

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