Franchise Advice Calling it a day


Jane Masih of Owen White Solicitors on the legal aspects of the resale process


S


ome franchisees are surprised by the processes, set out in their franchise agreements, that they are contractually bound to follow when they want to sell their business


and can subsequently feel aggrieved by the level of control that their franchisor can exert. To understand the rationale for the


control the franchisor exerts, it is helpful to remember that a franchise, while independent from the franchisor as a financial and legal entity, is dependent on the licence rights granted to it by the franchisor. Without a current franchise agreement, a franchisee has nothing to sell. The franchise agreement will typically contain provisions relating to a sale of the business. It is standard practice for a franchisee to


have the right to sell, subject to various conditions being satisfied. Generally these will include: • The franchisor having the right to review the terms of the buyer’s offer and an option to purchase on the same terms • The buyer satisfying the franchisor’s criteria as a prospective franchisee • The buyer agreeing to sign a franchise agreement with the franchisor and attend the franchisor’s training course • Payment of commission where the franchisor has introduced the buyer to the franchisee


• Payment of a fee to cover the franchisor’s reasonable costs in dealing with the franchisee’s application to sell • Payment of all monies due to the franchisor at the date of completion of the sale of the franchise Increasing numbers of franchisors


require the parties to use a standard form of resale agreement and to contribute towards the franchisor’s legal costs in dealing with the sale. If you are considering selling your franchise, it is advisable to review the provisions in your franchise agreement prior to entering into negotiations, so you are aware of the conditions that will need to be satisfied for the sale of your franchise to proceed with the franchisor’s consent. n


JANE MASIH


Jane Masih is director and head of franchising at Owen White Solicitors. To contact Owen White please visit www.owenwhite.com, email jane.masih@owenwhite.com or call 01753 876 800


Looking for experienced and cost-efficient


franchise solicitors? Owen White is one of the leading franchise specialists in the UK with over 30 years’ experience of providing legal advice to both franchisors and franchisees.


Services include:


• Drafting franchise and master licence agreements • Franchise disputes and litigation • Franchise resales • UK and EU competition law and relevant exemptions • Brand protection • International expansion • Franchise agreement reviews


www.owenwhite.com 22 | Businessfranchise.com | October 2014


For a free, no obligation consultation ...


Contact


Jane Masih on 01753 876 800 or email jane.masih@owenwhite.com


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