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Fra nchise advice


success. This is the legal contract between you and the franchisor. Key


should also list any risks or issues that are currently affecting the business, such as debts, problems with the lease or open litigation cases. And always get the agreed warranties in writing.


Share sale versus asset sale These terms describe the two different types of sale available. The type of sale affects many aspects of the purchase process and beyond, such as which warranties you’re entitled to and how tax liabilities are handled. So make sure you understand what you’re getting into.


Share sale: This is where you sell the business in its entirety, so the buyer would acquire the assets as well as any liabilities associated with the franchise.


Asset sale: In this case, only the business assets are sold, meaning the buyer does not take on the legal responsibility for the liabilities. Each party can pick and choose


which assets are exchanged. Be aware that you won’t always have a great deal of choice over the type of sale.


Sale and purchase agreement This is the legally binding document between the seller, buyer and franchisor. Once signed, it obligates the buyer and seller to complete the sale and purchase of the franchise. The exact details will depend on the type of sale, which will be either share or asset purchase. Typically, this contract documents


everything the parties have agreed on, including which assets are being exchanged. Therefore, it’s important to seek advice and make sure you’re happy with the agreement before signing on the dotted line!


Franchise agreement Whether you’re buying a new or existing franchise, the franchise agreement is essential to your business


features include: Ÿ Obligations the franchisor and franchisee have towards each other. The terms of the agreement aren’t negotiable, but you need to understand what you’re signing up to


Ÿ Conditions allowing for the termination of the contract. This could include everything from how often the franchisor reviews your business plan to the resale profi ts the franchisor is entitled to if you sell. Be familiar with every detail


It is essential to get the franchise agreement reviewed by a specialist franchise lawyer. As the UK franchise market grows and matures, franchise resales are becoming more common. So even if you aren’t ready to buy an


existing franchise right now, keep these tips in mind. After all, you never know when you’ll spot your dream franchise, and when you do it may not be brand new. l


Roz Goldstein is the founder of Goldstein Legal


BUSINESSFRANCHISE.COM 21


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