Franchised Business for Sale in Hervey Bay & Sunshine Coast

1. Franchised Business for Sale in Hervey Bay & Sunshine Coast When taking on a franchised business sale as a going concern, one that has been trading, there are a few considerations to keep in mind to ensure your sale is smooth and successful. And there is no reason to think that it won’t be. However, some of these lessons have been learnt from past experience, while others are simply a legal requirement under the Franchising Code of Conduct. The seller is also bound under their existing Franchise Agreement so you must be aware of any conditions or requirements placed on the seller at the time of exit. That is why the seller / franchisee should first contact their franchisor to inform them of their intention to exit the franchise system. The franchisor will usually be able to provide documentation in relation to incoming (buyers) and outgoing franchisees. This documentation will help you to meet the franchisee’s obligations and make certain you and your client take the right steps towards the completion of sale. Furthermore, it keeps the franchisor involved in the sale process. The following list, although not exhaustive, covers some of the major aspects to bear in mind for a franchise resale:- First Right of Refusal: You will nearly always find this clause in the Franchise Agreement. This is an obligation on the franchisee to offer the franchise back to the franchisor first. You must ensure this has been undertaken prior to listing. Franchise Agreement: Check with the franchisee or franchisor (if necessary) to see that the existing Franchise Agreement is assignable or whether the franchisor’s intent is to issue the prospective buyer with a new Franchise Agreement. Check here: http://bit.ly/2gBwwZu Disclosure Document: Perhaps the most important consideration before entering into any agreement with the buyer is the Disclosure Document. Under the Franchising Code of Conduct the prospective franchisee (buyer) must be provided with this document 14 days before entering into a Franchise Agreement. The Disclosure Document provides the incoming franchisee with sufficient information to enable them to make an informed decision. Franchisee Approval: At some point, the franchisor will need to approve the prospective franchisee to ensure they are capable of running the franchise. They must comply with the

2. franchisor’s criteria. The franchisor will have an application form that you can forward to prospective franchisees so they can apply to become approved. Contract Special Conditions: Special conditions section of the contract may include clauses such as:  Subject to Approval of the Purchaser as a Franchisee  Subject to Transfer or New Franchise Agreement  Subject to Release of Vendor from Current Franchise Agreement Incoming or Outgoing Costs: Without knowledge and disclosure of these costs (if applicable), the whole negotiation can easily be derailed. You need to know what is payable, to whom and when. For example, it in not uncommon for the franchisor to charge the existing franchisee an Exit Fee and the buyer an Incoming Fee which is usually for initial training. Furthermore, depending of the vendor’s current level of compliance with the franchise system, the franchisor may not approve the buyer until such times as either buyer or seller commit to refurbishment or signage upgrades and POS upgrades if they are behind in these areas. It pays to ask the franchisor, what needs to be done? Visit us at: http://foresightbusiness.com.au/listings/hervey-bay/