Some individuals or companies are fortunate to experience great success in their business ventures. Franchisors may own a valuable piece of intellectual property or a business plan that would transfer well to another owner. It is understandable that large companies or individuals with significant monetary assets might hope to acquire this business model.
In many situations, this business model is already organized into a franchise structure. A franchisor may oversee dozens or even hundreds of franchisees that contribute to its overall revenue stream. Even so, it may be possible to acquire this entire franchise structure and all the associated intellectual property and business models.
A North Carolina franchise acquisition lawyer could help individuals or business entities considering the acquisition of an existing franchise business network. Franchise business lawyers could explain the legal duties a purchaser would inherit and draft acquisition paperwork that can make the sale official.
Acquiring an existing franchise network has both drawbacks and advantages. One main advantage is that a buyer could immediately reap the profits the network of franchisees produces. The buyer of an existing business structure is immediately entitled to collect the profits this structure produces. This will include the royalties that the individual franchise holders owe to the franchisor under the terms of their master franchise agreements.
Another benefit of purchasing an already existing franchise network is that much of the legwork involved in creating the network already exists. A ready-to-purchase franchise system should already have dedicated franchisees locked into long-term agreements. While it may be necessary to update these agreements, a franchisee is unlikely to want to upset their personal business and revenue stream in light of the franchisor’s acquisition.
While this type of purchase may seem an ideal investment, obtaining a franchise network is not without responsibilities. All franchisors owe a duty to their franchisees as described in the various franchise agreements. This usually includes provisions for training employees, drafting or updating operations manuals, and executing marketing campaigns. A North Carolina franchise acquisition lawyer could help potential buyers determine whether acquiring a franchise network is right for them.
In addition to the close connection that franchise network acquisition will create between a purchaser and existing franchisees, this potential purchase also necessitates a relationship between the current franchisor and the buyer. Purchasing a franchise has more elements to consider than acquiring many traditional stand-alone businesses.
Because a purchaser must take immediate responsibility for overseeing franchisees, proper negotiation and drafting of a franchise acquisition contract is essential to the process of franchise network acquisition. The documents should cover essential topics including:
On top of these common topics, a franchise network purchase contract should fit specifically to the sale. For example, these arrangements should detail how the current owner will disclose the sale to the franchisees, how the buyer will introduce themselves to the franchisees, and what guidance the current owner must provide to the buyer to ensure a smooth transition. A franchise network purchase attorney in North Carolina could help potential buyers craft purchase agreements to cover any and all facets of acquisition.
When most people think about the possibility of franchising, they consider transforming their current business model or intellectual property into a new franchise. This requires the drafting of disclosure documents and franchise agreements and finding franchisees to sell this business model, which could overall be an expensive and drawn-out process.
Another option is to acquire an already existing franchise network. This involves buying out the current owner of a franchisor and assuming the role of the franchisor in that system. Naturally, this will involve a great deal of negotiation with the current owner, and a North Carolina franchise attorney could help set you up for success during negotiation and change of ownership.
While purchasing a franchisor’s network can bring an immediate stream of income, it also obligates you to provide training, operations manuals, and anything else already contained in franchise agreements. Contact a North Carolina franchise acquisition attorney today to see how they might be able to help.