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The first thing that most franchisees do who wish to sell their business is speak with the franchisor. A good franchisor will have a resales policy and may be able to assist the franchisee with the sale of their business.
In addition, many franchisees use the services of a broker to help sell their franchise. There are a number of specialist franchise or industry specific websites that can be used to advertise a franchise for sale.
We would always advise that parties in a business sale (including a franchise) have the benefit of legal representation. Without legal representation you may end up with unexpected legal liabilities and problems after the sale has been completed.
The solicitor will guide you through the sale process and also ensure that all of the relevant documents are put into place, including a business purchase agreement.
Most franchise agreements contain provisions that govern the sale of an existing franchise. Usually the franchisor’s consent must be given to the sale, which is generally subject to various conditions.
The conditions usually include (i) the franchisee not being in breach of the terms of the franchise agreement or the operations manual (ii) the approval of the buyer by the franchisor as a franchisee (iii) the payment of any sums owing to the franchisor by the outgoing franchisee (iv) the payment of any fees due in relation to the consent and (v) the incoming franchisee signing a franchise agreement with the franchisor.
In addition, the franchisor usually has first refusal in relation to the purchase of the franchise business, but this right is rarely exercised in practice.
Many franchisors have little or no involvement in resales other than (i) approving the new franchisee (ii) charging any fees that are due and (iii) ensuring that the new franchisee signs a franchise agreement.
If you need any advice on selling your franchise, please contact a member of our team in confidence here or on 02920 829 100 for a free initial call to see how they can help.
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