Franchise Advice


How free are you to sell your


franchise business? Manzoor Ishani on the conditions of a resale


f you are thinking of buying a franchise, you will often be told by your prospective franchisor that you will be able to sell your business when you are ready to retire or move on. In the intervening years, you will be working not only to earn a good living but also to enhance your investment and so all that hard work will not be wasted. Most franchisors encourage prospective franchisees in this dream. In commerce as in life, however, things are seldom straightforward. Those who buy on a promise from a franchisor that they will be able to sell often forget that any such promise comes with certain conditions. Certainly, most franchise agreements are very clear about such conditions but at the


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time of buying a franchise you are likely to be more concerned about other things, such as securing the franchise and start the business, than about the fine detail of the conditions. If you are a prospective franchisee, you


should reassure yourself by looking closely at those clauses in the franchise contract that deal with your right to sell your business and the conditions attached… and there will be conditions! You will need to satisfy these conditions if you want to exercise your right to sell. So, what conditions should you expect to see?


• First, that you are not in breach of contract at the time of the proposed sale


• Second, that your franchisor gives their 18 | Businessfranchise.com | July/August 2014 consent and approves of your buyer


• Third, that your buyer passes your franchisor’s training course


• Fourth, that your buyer signs a franchise contract thereby agreeing to abide by the terms of the franchise in the same way as the other members of the franchise network


Depending on the nature of the franchise and the franchisor, there will also be other conditions, namely:


• Refurbishing of premises (where appropriate)


• Upgrading the franchised business • Payment of the franchisor’s costs and (sometimes but not invariably) some sort of fee by way of renewal


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