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Posts tagged "sale of franchise"

I want to sell my franchise, do I need an attorney?

The sale of any franchise or business would be less than prudent if the seller did not have the protections outlines in a detailed Buy-Sell agreement. As a Seller you purportedly do not want to remain on the hook for more than absolutely necessary. Its not just about getting your purchase price, it is about becoming legally absolved from further liability where you can. And if you are carrying back a note for some of the purchase price, then you are still tied to the business, and potentially tied to the success of the business. Careful documentation of the details of a cary back note and obtaining security are critical, since if the business has cash for problems, you may be the first to NOT get paid. You definitely want to have security separate and apart from the business---do you really want to take back over the business? If so, this needs to be properly documented not only with the Buyer but with the Franchisor. Having legal counsel assist you with the documentation is critical since years later debtors of your buyer may start calling you again if the buyer defaults. Having a business broker is not enough, even if they provide a "form" assets purchase agreement. These are woefully deficient. There is no substitute for real legal counsel. The small investment today will save huge headaches and potential litigation in the future.

My franchisor will not approve the sale of my franchise to a qualified buyer.

The franchise agreement contained in the Franchise Disclosure Document or FDD generally has detailed provisions for the approval process of a buyer of your franchise, but a franchise agreement can be more vague and just say within a reasonable period of time. Sometimes the franchisor will take more than a reasonable time in attending to this matter for a multitude of reasons. Perhaps the buyer is not exactly what they want but can not really deny the qualifications. Perhaps the longer the franchisor delays the more fees you rack up they will demand at closing. Perhaps they want to buy the franchise back from you but do not like the terms they would have to meet and want your buyer to go away so they can make you a lower offer. All of these actions are unreasonable actions potentially causing a franchisee damages. If this is happening to you, an experienced franchise attorney can help you make the appropriate demands onto the franchisor and outlining your rights and potential damages. Franchisors generally will not take your complaints too seriously when coming from you the franchisee, but should take those demands from an experienced franchise attorney representing you very seriously. Where there are very real damages (lost a good buyer), the matter becomes must more serious and the Franchisor does need to understand the legal ramifications of the inaction.

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