After purchasing and building a successful franchise in Arizona, you are ready for your next venture and want to move on. You might be wondering how to go about selling the business.
Since you are the franchisee, there are specific contract obligations outlined by the franchisor that you need to follow. Understanding these critical steps can help you ensure the sale of the business is a smooth transition.
Checking the agreement provisions
When you bought the franchise, you and the owner signed a franchise agreement, which dictates the terms of a sale. These contracts usually include transfer clauses that explicitly require written approval from the franchisor before selling a business.
Many franchise agreements also have right of first refusal (ROFR) stipulations where the franchisor can buy the business back before you sell to a third party. Being aware of these conditions can guide how you formally request permission from the franchisor for the sale.
Considerations with potential buyers
The new owner of the franchise must be financially stable and capable of maintaining the standards set by the franchisor. After getting approval to sell the franchise, you have responsibilities to ensure the buyer is qualified, including:
- Conducting background checks
- Vetting the buyer’s finances
- Evaluating training certifications
When the potential buyer meets the franchisor’s established criteria, you may move forward with drafting a new franchise agreement. A lawyer can help you prepare the paperwork needed to finalize the transfer of ownership.
Helping you move forward
Selling your franchise requires careful planning while abiding by your contract’s terms. Maintaining transparency with both your franchisor and potential buyers can help you achieve the best possible outcome.