In a previous post, we discussed the process of selling your franchise. Now, however, we will walk you through the basics of re-selling your franchise – a totally different ball game.After you have notified the franchisor that you’re considering re-selling your franchise, there are several aspects you need to take into account.
Finding a prospective buyer
One of the often overlooked factors of the re-sale process for franchisees is that they do not realize that the franchisor will help them find the right buyer.
There are several considerations to make when re-selling your franchise.
Here are several ways in which the franchisor may assist in this process:
Find prospective buyers for a fee.
Use a third party sourcing firm to locate prospective buyers.
Direct you to franchise resale firms within the network to identify potential buyers.
The truth of the matter is that any franchisor will want a suitable buyer for its franchise network. Often, the franchisor will have a specific set of guidelines and procedures that outline the steps a franchisee needs to take prior to engaging in the re-sale process.
What you need to do before negotiations
There are two documents that a prospective buyer will need to review prior to any negotiations: the non-disclosure agreement and the prospectus of sale.
The NDA protects the franchisee’s proprietary information, while the prospectus details all necessary financial information as well as the asking price for the buyer.
The prospectus information will provide an overview of the whole franchise as well as the franchisee’s business. It will also cover the financial and accounting history of the business to include sales, operating costs in addition to profit and loss. The franchisee will also need to describe the property, staff members and equipment used in the location.
What you need from the prospective buyer
In addition, the potential buyer will need to meet with representatives of the franchisor for approval of the sale. Not only will the purpose of this meeting be for approval, but typically, it will also be training for the buyer. This is especially important because if the prospective buyer does not meet qualifications through the training provided, the sale could potentially be rejected.
What you need to know during negotiations
As soon as a price has been agreed upon, the franchisee and the prospective buyer will need to confirm the sales offer.
Any legal transfer of the franchise ownership cannot be completed without proper documentation and approval from the franchisor.
This point in the sales process is where it is essential to work with an attorney who specializes in franchise re-sales. There will be fees, commissions and various other unforeseen expenses prior to the sale, so franchisees will need to settle these before completing the sale.
The franchisee is also required to notify all supplies and vendors in advance of the sale’s completion so that the prospective buyer can establish credit with the providers. This is vital to ensure there is no business interruption following the completion of the sale.
What you need to do following completion of the sale
When the funds are sent for the sales price, the franchisee effectively transfers ownership of the business to the buyer. Often, the franchisee will conduct onboarding to walk the buyer through the initial operations of the business.
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
What You Need to Know Before Re-Selling Your Franchise
Author: Scarinci Hollenbeck, LLC
What to expect when re-selling your franchise
In a previous post, we discussed the process of selling your franchise. Now, however, we will walk you through the basics of re-selling your franchise – a totally different ball game.After you have notified the franchisor that you’re considering re-selling your franchise, there are several aspects you need to take into account.
Finding a prospective buyer
One of the often overlooked factors of the re-sale process for franchisees is that they do not realize that the franchisor will help them find the right buyer.
There are several considerations to make when re-selling your franchise.
Here are several ways in which the franchisor may assist in this process:
Find prospective buyers for a fee.
Use a third party sourcing firm to locate prospective buyers.
Direct you to franchise resale firms within the network to identify potential buyers.
The truth of the matter is that any franchisor will want a suitable buyer for its franchise network. Often, the franchisor will have a specific set of guidelines and procedures that outline the steps a franchisee needs to take prior to engaging in the re-sale process.
What you need to do before negotiations
There are two documents that a prospective buyer will need to review prior to any negotiations: the non-disclosure agreement and the prospectus of sale.
The NDA protects the franchisee’s proprietary information, while the prospectus details all necessary financial information as well as the asking price for the buyer.
The prospectus information will provide an overview of the whole franchise as well as the franchisee’s business. It will also cover the financial and accounting history of the business to include sales, operating costs in addition to profit and loss. The franchisee will also need to describe the property, staff members and equipment used in the location.
What you need from the prospective buyer
In addition, the potential buyer will need to meet with representatives of the franchisor for approval of the sale. Not only will the purpose of this meeting be for approval, but typically, it will also be training for the buyer. This is especially important because if the prospective buyer does not meet qualifications through the training provided, the sale could potentially be rejected.
What you need to know during negotiations
As soon as a price has been agreed upon, the franchisee and the prospective buyer will need to confirm the sales offer.
Any legal transfer of the franchise ownership cannot be completed without proper documentation and approval from the franchisor.
This point in the sales process is where it is essential to work with an attorney who specializes in franchise re-sales. There will be fees, commissions and various other unforeseen expenses prior to the sale, so franchisees will need to settle these before completing the sale.
The franchisee is also required to notify all supplies and vendors in advance of the sale’s completion so that the prospective buyer can establish credit with the providers. This is vital to ensure there is no business interruption following the completion of the sale.
What you need to do following completion of the sale
When the funds are sent for the sales price, the franchisee effectively transfers ownership of the business to the buyer. Often, the franchisee will conduct onboarding to walk the buyer through the initial operations of the business.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
