Selling a franchise is clearly very different to selling an ordinary business. The procedure to sell an individual franchise will be set out in your franchise agreement. It is of vital importance that any sale of a franchise be conducted in line with all relevant franchise documentation and legislation.
Our specialist franchise lawyers can assist with preparing the necessary documents to effect the sale, including:
drafting the sale of business agreement;
ensure compliance with the franchise agreement
negotiating with the franchisor and third parties;
assisting with the settlement;
advising on any restrictions preventing you from selling or opening up a new business; and
assisting with the transfer or assignment of the lease.
LegalVision’s franchise team have advised some of Australia’s largest franchise networks. We have helped franchisees sell their franchise in various industries and can apply this experience to help you through the sales process. Our broad experience means we understand our clients’ industries and the multitude of factors that impact upon a successful sale for both a franchisor and franchisee.
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5 Things You Need to Know About Selling a Franchise
1Many 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.
2One 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.
3Once 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.
4The new franchisee will need to enter into the franchise agreement with the franchisor, as well as ancillary agreements like the restraint of trade agreement and sometimes a personal guarantee.
5If 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.