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Updated: 2014-09-09 10:38

Franchise purchase and sale

Franchise purchase - sale process embraces familiarisation by the franchisor and potential franchisee with each other's offers and expectations, information exchange and negotiations on franchise agreement. Usually, franchise purchase - sale process consists of the following stages:

1. First contact. Franchise purchase-sale process usually is initiated by a franchisee. During the first contact, it is important for a potential franchisee to express his/her clear interest in franchise acquisition and commitment to start negotiations.

2. Information exchange. Upon receipt of an inquiry, the franchisor contacts the potential franchisee and sends initial information on the business model and questionnaire/application to the latter. The questionnaire/application is aimed at checking the potential franchisee's suitability for starting business under franchise agreement (marital status, educational background, working experience, own business management experience, property, motivation, etc.). If the franchisor is interested in the potential franchisee, it is followed by exchange of more detailed information and signing confidentiality agreement.

3. Making a commercial offer Once the franchisor is satisfied with the reliability of the potential franchisee, the parties start negotiating on financial terms and conditions. The franchisor makes a commercial offer to the potential franchisee with initial and periodic franchise payments and other terms and conditions of franchise acquisition.

4. Signing franchise agreement. Negotiations finish by signing an agreement. The franchisor always has an agreement template, but some clauses may be amended under a separate agreement with the specific franchisee.