Franchise transfer

A franchise resale has a third party at the table who is not negotiating price and cannot be worked around. The franchisor decides whether the buyer is acceptable, what they must do to be approved, and what the franchise looks like once they take over.

What franchisors commonly require

• Approval of the buyer, including financial and background screening
• The buyer completing the franchisor’s training program
• A transfer fee, payable to the franchisor
• The buyer signing the current franchise agreement rather than assuming the seller’s older one — which can carry different fees and terms
• Renovation or refresh of the premises to current brand standards, sometimes at significant cost

The right of first refusal

Many franchise agreements give the franchisor a right of first refusal — the option to buy the business themselves on the terms the buyer has offered. A seller can therefore run a full process and still have the franchisor step into the buyer’s place at the end, which is worth knowing before the process starts.