If you own a franchised business there will come a time when perhaps you wish to sell your franchise. When selling a franchise this is called a Franchise Transfer in franchising legal terms. You will be selling your rights in the current term of the franchise agreement to another party. The transfer must be approved by the Franchisor and therefore there is a whole lot to consider. Here are the Top7 Tips in selling a franchised business.
1.) Before advertising your franchise for sale anywhere, be sure to read the terms of the franchise agreement under; Transfers
2.) Contact your franchisor so they know your intentions ahead of time and do not find out by reading it on a website or classified section.
3.) Ask you franchisor if there are any buyers for your area currently or if there have been previously and ask for contact information.
4.) Consider a Business Broker, but shop around as they are not all the same and can tie up a listing and sometimes do nothing with it for 6-months.
5.) Be careful of competitors who are interested as they may not qualify as per your franchisor’s business strategy and they will deny application for transfer and you will have disclosed proprietary information, which could be a violation of your franchise agreement.
6.) Try to get all the money from the sale up-front, as a future dispute with the buyer and the franchisor could mean you will not be paid on any terms you came up with in the sales agreement.
7.) Sell your business to someone who will be good for the franchise systems too, this will help with more smooth sailing through the transfer application with your franchisor.