Driving through resales

Some franchisees exit because the franchise has not met their expectations, and consequently one of the problems franchisors tend to experience in the event of a resale is that the outgoing franchisee leaves the network owing monies to the franchisor.

Once the franchisee has left the network they usually go off the radar and consequently the franchisor is unable to track them down and ends up out of pocket.

In addition, resales can often drag on, and I have known cases where an outgoing franchisee has returned to compete with his or her purchaser, and has even sued their old franchisor, because their exit was not closed off properly.

These are problems that can easily be overcome if franchisors use the tried and tested franchise resale service provided by specialist franchise solicitors such as ourselves.

Our new franchisor clients are sometimes surprised to learn that, as their solicitor, we can hold the purchase monies on their behalf and can thus deduct all monies that are owed to them before the balance is paid to the outgoing franchisee. And that this doesn’t happen until the outgoing franchisee enters into a binding release and restrictive covenants.

The added attraction to our resale service is that it costs the franchisor nothing as both the outgoing and incoming franchisee usually agree to pay our fixed fee legal costs.

If you would like to find out more about our franchise resale service, please contact Tracy Williamson on 01603 703079 or email tracy.williamson@ashtonslegal.co.uk. Alternatively, please complete one of our enquiry forms.