Franchise Resale program
There are many reasons why a franchise owner may want to sell units. In some cases, the franchise is experiencing low sales or is under poor leadership. Other times, franchisees want to seek other investment opportunities or prepare for retirement. No matter the reason, the resale of franchise units is becoming more common, and is an important part of franchise law.
Under most franchise agreements, there are regulations concerning the transfer of rights from one franchisee to another. For example, the agreement might specify that a potential buyer meet certain criteria, such as special training or a sound financial standing. The franchisee must request the franchisor’s permission to sell, and then present a specific buyer that meets all of the required criteria. This could be a difficult process. However, an established franchise resale program can make this procedure significantly easier. For starters, the program utilizes a pool of qualified potential buyers. This makes the process of finding a buyer significantly easier.
Franchise resale programs are customized for each brand to maximize return profits. They also provide instructions for the buyer about how to advertise the unit, train personnel, and grow in the current market. Therefore, franchise resale programs can be very beneficial to the buyer and seller of a franchise.
Before the creation of a franchise resale program, several legal issues must be taken under consideration. These include disclosure requirements, relationship laws, and financial performance representations. If you are buying or selling a franchise unit without the help of a resale program, a close consideration of these laws is essential.
Are you in the process of buying or selling a franchise unit? Contact a KFB-Law attorney today! Call (305) 929-8500 for our Miami office or (850) 391-5060 for our Tallahassee office.