Franchise Resales for Franchisees
A 'Franchise Resale' is where an existing franchisee sells its business to someone else who takes over the franchise business and becomes the new franchisee. A sale of the franchise is the best exit that a franchisee can achieve from the franchise relationship as it allows them to sell their business on for a profit and receive a good return on the investment that they have built up.
A franchisee cannot sell their business to just anybody. As the purchaser is going to join the franchise network of the franchisor, the purchaser has to be someone who meets the franchisor's requirements and has been formally approved by them. All well drafted Franchise Agreements will have a detailed clause dealing with this approval mechanism.
As with any business sale, a Franchise Resale involves detailed legal documentation. Usually this would involve:
a Business Purchase Agreement (detailing the terms of the purchase/sale)
a Termination and Release Agreement (releasing the Seller from their remaining obligations under the franchise agreement
a new Franchise Agreement to be signed by the Purchaser governing their operation of the franchise once the purchase is completed
Often the franchisor will have standard documents for a Franchise Resales process which can greatly aid the process. However, regardless of whether they do or not, we are able to assist Purchasers and Sellers of franchise businesses with the, often complex, sale or purchase of a franchise.
Please give us a call now if you are considering selling or purchasing a franchisee as a going concern and we would be delighted to discuss the process and our services in more detail.