Selling or buying an existing franchise can be full of pitfalls. Issues to consider include:
- Will or should the franchisor approve the transfer?
- Has the franchisor complied with any state franchise relationship laws that may apply?
- Has the franchisor provided pre-sale disclosure, and does it have to do so?
- Can franchise transfer, renewal or training or other fees be negotiated?
- Are real estate or equipment leases involved?
- Will assets (real estate or FF&E) be sold as part of the transfer?
- Should the transfer include an asset sale, merger or share/membership purchase?
- What happens regarding the personal guarantees?
- How do you deal with accounts receivables, accounts payable and any outstanding coupon or gift certificate programs?
- Are there any liens on the business?
- How will post-term non-compete provisions of the franchise agreement apply?
- What is the best way to transfer the payment for the purchase, and will any escrow or hold back apply?
- What kinds of loans are available?
- Are there specific requirements for SBA and other government backed loans?
Scott Weber can help both franchisors and franchisees navigate these, and other issues relating to franchise transfers. Don’t go it alone. Call Scott Phillip Weber, PA at 813-337-6650.