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Everything in life goes through changes, and this is no different in the world of business. Your franchise may be thriving, but there is always a chance that one of your franchisees will want to move on and pursue new opportunities by transferring their interests to a new owner. In this situation, it is important to speak with a Georgia franchise transition of ownership lawyer at Franchise.Law to protect your rights and brand image.
Our franchise attorneys are based in Charlotte, NC, but we offer legal services for franchisors all over the country because we focus on federal regulations. This allows us to provide our expertise in these matters even though we are not licensed to practice law in Georgia.
By far the most valuable asset to any franchise is the brand package. Consumers are attracted to the name and image, and it could take years to build the kind of trust and recognition that makes people repeat customers.
This means that franchisors have a strong interest in protecting their brand, and one of the ways they can do so is by choosing who they allow to use it. Franchisors are required to provide disclosure documents, so hopeful franchisees can make an informed decision about signing an agreement, but this process goes both ways. Franchisors should conduct their own due diligence on potential franchisees to ensure that they will treat the brand and business professionally.
Many franchisees are operated through a legal entity instead of an individual. This offers both sides several advantages, namely in liability and debt protection. However, entities can be easily bought, sold, or otherwise transferred through methods such as stock interests. While the entity itself remains the same, the person or people with operational control could change. This provides the potential for the franchisee to be owned by someone who was not chosen by the franchisor.
Thankfully, franchisors can include change of control provisions in the agreement to protect their right to choose who gets to use their branding and trademarks. Broadly speaking, these provisions could prohibit a franchisee from selling their interests in the entity to another party without prior consent from the franchisor.
If you are a franchisor in Georgia, you should consult with your attorney to make sure that your franchise agreements include change of control provisions. Implementing these provisions is essential to defending your rights and brand integrity.
Having these rights memorialized in a contract is one thing, but adhering to the terms is another. Through a misunderstanding of their obligations or any other similar reason, it is possible for a Georgia franchisee to transfer their ownership before the franchisor is aware of the transaction, in which case it is vital to retain a lawyer.
Some contracts contain a clause that dictates specific remedies in the event of a breach. For example, if the change of control provision is violated, it could serve as a basis to terminate the franchise agreement. If the document does not include such a contingency, other legal remedies may be available, so it is important to discuss all of your options with an attorney.
A Georgia franchise transition of ownership lawyer could help you defend your business rights. We understand how protective you are of your brand, and our team could guide you through the process of writing change of control provisions into your contracts or enforcing these provisions if they are breached.
If you are a franchisor, speak with us to learn more about your rights. Call Franchise.Law to schedule a meeting with our team.