5 things you need to know about Selling a Franchise
- Many franchisees build up their business and then look to sell it in order to generate a capital gain. This can be a great strategy and can be beneficial from a tax perspective, compared to only generating an income from the business.
- One key issue that franchisees face when looking to sell a franchise is getting the approval of the franchisor. The franchise agreement requires the franchisor to sign off on the new franchisee.
- Once you’ve found a franchisee who will pay the asking price and who ticks all of the franchisor’s boxes, you’ll need to engage a lawyer to prepare a sale of business agreement.
- The new franchisee will need to enter into the franchise agreement with the franchisor, and ancillary agreements like the restraint of trade agreement and sometimes a personal guarantee.
- If you’re selling a franchise that is operated from a physical premises, you’ll also need to ensure that the commercial lease is assigned to the new franchisee. This can involve negotiating with the landlord and assisting the purchaser with the necessary negotiations. Finally, keep in mind that the easier you make it for the purchaser to come on board as the new franchisee, the easier your exit will be!
Commercial Law, Contract Law, Information Technology And Online Law, Intellectual Property, Capital Raising LawExperience:
Bank of America Merrill Lynch, Baker & McKenzie, Hogben Group
Employment, Franchises, Business And Commercial, LitigationExperience:
Clinch Neville Long, McCabes, Neville & Hourn
Business And Commercial, Franchises, LitigationExperience: