We can also assist in the purchase/sale of an existing franchise or distribution business. Franchise and distribution agreements generally require the franchisor’s or distributor’s approval for the sale of an existing business. The Franchise and distribution agreements in most cases will impose a transfer fee to be paid to the Franchisor.
Many times the Agreement will call for the buyer to sign a new agreement with new terms. In addition, after the sale the seller may be burdened with restrictions on its business activity post sale. Anticipating and planning for these restrictions, and being prepared to minimize their impact, negotiate or fight them, is crucial to achieving a successful sale.
Some Franchise Agreements include the “right of first refusal.” This gives the franchisor the right to match a third party’s offer to purchase the franchisee’s business. Franchisees often challenge the franchisor’s refusal to holdback consent to a sale or transfer sought by the franchisee. The Courts often side with the Franchisor in the Franchisor’s right to grant or refuse its consent.