Whether you are buying a new franchise or an existing franchise for sale i.e. a franchise resale, it is essential that you seek legal advice from an attorney who specializes in franchising BEFORE making any commitment to buying the business.
Although the existing franchisee (the seller) has a current franchise agreement with the franchisor…the new franchisee (the buyer) will be required to sign a new franchise agreement per the franchisor. In some instances it is possible to be “assigned” the balance of the initial agreement…but is more likely if you buy a franchise resale that you will be required to sign a new current franchise agreement. Even if you do not engage a legal professional that specializes in franchising for the entire transaction, it is imperative that you have a franchise specialist review the franchise agreement. Any franchise agreement is likely locking you in for a 10 year minimum! It is worth the additional legal cost to bring in an expert; the money you spend on expert advice could be one of the best investments you make.
In this section we will look at the legal advice you need to seek when buying and selling a franchise. We cover FAQ’s regarding the Franchise Disclosure Document and franchise agreement….and why it is important that you have a franchise attorney look over both.