MBI Consulting (UK) Ltd had agreed to buy Regency mansion, Plas Glynllifon, in Llandwrog, from receivers David Currie & Co.
Fears were raised the firm could change the hall's name, which dates back to the 16th Century.
On Friday, MBI  announced "with regret" it had to pull out of the deal.
"It had never been our intention to change the name of Plas Glynllifon," a spokesman for the West Yorkshire company said.
"The property's long and colourful history is a huge part of its charm and we always intended to re-open it with that same name."
The spokesman added: "The project presented a number of extreme technical challenges but ones which we were always prepared to overcome, however, the unexpected negative reaction we have encountered has led us to conclude our involvement in the development."
The name-change issue was flagged up by Gwynedd councillor Sian Gwenllian, arising from online marketing material suggesting a more English-sounding name could be used as a replacement.
David Currie, director of receivers David Currie and Co, said: "It's very disappointing, but unfortunately we have been down this road before. There are a lot of people still interested in it so we're not totally on the floor."
The prospective buyers of a historical hall in Gwynedd have pulled out of the deal, blaming an "unexpected negative reaction".