Franchise Agreement Tips

Under the franchising code, the franchisor must make available to any potential franchisee, at least 14 days before the signing of the franchise agreement or before the acceptance of the non-refundable money: in this model, the franchisor designates a local partner called Master Franchised, which acts as a franchisee in the territory with a view to developing the network by sub-franchising. Buying a franchise is a big decision. It is quite difficult when it comes to a green meadow. If it is a „used franchise“ that has already been operated by a franchisee and is sold there, it is even more complex. This is because you are doing two completely separate transactions. The first transaction is to acquire the right to operate the business under the franchise brand and to use its know-how. The second is the acquisition of an existing business with all its liabilities and potential creditors. Each transaction is related to the other, but it is linked to different parts. The purchase of the franchise is at franchisor. The business purchase is with the outgoing franchisee (unless the franchisor has already purchased it and sells it to the former franchisee).

The two transactions must be coordinated so that they are concluded simultaneously. When you buy the franchise, you must do your due diligence on the concept by discussing among other things with as many existing franchisees, as it is convenient. You must learn the four principles of life for franchisees. That`s what I`m talking about. (1) You must take and follow professional legal and financial advice, (2) You must follow the system, (3) You must work hard and (4) You must accept that you may fail. Buy the business you need to decide whether you are buying the shares of the existing business or just its assets. Buying shares is often easier, but it means you accept all the debts and liabilities of the company as well as its assets. If you only buy assets, you can be more nuanced in what you buy.

There are taxes, income, pensions, real estate and other legal issues that require specialized attention when buying an existing business, and without this advice, you will be heading for important and potentially very costly problems. It is therefore important that, when purchasing a resale franchise, you invest in quality specialized advice by a lawyer who has a proven track record of such trades. Not doing it means penny is wise, but stupid books. Franchisors and franchisees regularly enter into business contracts as part of their franchise activities. For example, franchisors may enter into contracts with suppliers to deliver certain products to their franchisors, and franchisees would regularly enter into contracts with customers to provide various goods and services. The sequence of events depends on stage 5 until the opening time. Do you know in which country all disputes related to your franchise agreement would be prosecuted? If not, check now, especially if your franchise has an international component.