At Hutchinson Thomas we can advise you on how to assist your franchisee when they decide to sell their franchise on, to include drafting the sale and purchase agreement, making sure a confidentiality agreement is in place before any sensitive information is released and advising you in respect of any transfer of commercial premises.
Our franchise team has extensive experience in all aspects of franchising across a range of sectors. We are an accredited member of the British Franchise Association, the UK’s leading regulator, and we adhere to their high standards and ethical franchising ethos.
If we are involved in setting up a franchise agreement on your behalf, we will work with you to ensure that a robust sale of business clause is included covering exactly how a resale will take place. Supporting your franchisee throughout the resale process can be beneficial. It will help the sale take place smoothly and reassure the potential new franchisee of your strength and involvement in the brand.
The franchise resale process
The resale procedure will be set out in your franchise agreement so that both you and your franchisee know what steps need to be taken. The franchise agreement will also offer you a degree of control over the process and give you the right to approve the sale to the new franchisee.
It is advisable to take the opportunity to be involved in the transaction, to meet the proposed buyer, to take up references and to discuss their plans and ideas for the business. This will give you the chance to ascertain whether they are likely to be a good fit for your brand and whether they will abide by your rules and the rules of your franchise.
Considerations in agreeing the onward sale of a franchise
The sale and purchase agreement will need to be tailored to your specific requirements. It will contain all of the terms and conditions of the deal and you will also need the new franchisee to enter into a franchise agreement with you.
The buyer’s legal team are likely to have questions and may ask for adjustments to be made to the sale and purchase agreement.
Major considerations include whether the sale will be of assets or shares, whether there are premises attached to the sale and what warranties and indemnities you will offer the buyer.
You are likely to have to obtain the consent of any landlord to the new commercial tenant, and it is advisable to start this process early, as they may be slow to respond.
Although a resale may seem disruptive and involve you in extra work, it can be beneficial to your organisation. Your existing franchisee is likely to ensure that the business is in as good shape as possible in readiness for the sale, and the new buyer will bring new energy and enthusiasm to your brand. By working with both the outgoing and incoming franchisees, you have the opportunity to promote and protect your interests.
Hutchinson Thomas is the first law firm in Wales to be awarded the Law Society Mark of Excellence. The firm and many of our lawyers are recognised year on year in the Legal 500 publication as leading individuals in their field.
We have wide-ranging experience of the franchise industry and as well as leading expertise we provide an excellent service to our franchisor clients. We will take the time to understand your business needs and make sure we are always available to speak to you when needed to answer any questions you may have.
If your franchisee is considering a resale and you would like to speak to one of our expert solicitors, ring us on the following numbers or fill in our contact form.