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Can a franchisee sell their business at any time?

Author: Vicky Wilkes

answered by Vicky Wilkes

Senior Associate at Squire Patton Boggs (UK) LLP

A franchisee’s ability to sell their business will be governed by the terms of their franchise agreement and it is unlikely they will have an unrestricted right to sell their franchise business.Usually a franchisor will want to be able to exercise complete control over its franchise network. This means that a franchise agreement is likely to contain numerous conditions that must be met before any sale of the franchise business can go ahead.The conditions may include providing the franchisor with details of the proposed purchaser, the proposed purchaser satisfying the franchisor of its business experience and financial standing, payment of the franchisor’s costs of approving the proposed purchaser and entering into a new franchise agreement with them, and payment of an ‘introduction’ fee in the event that the franchisor introduced the purchaser to the franchisee.Therefore, while the franchisee may have the potential to sell its franchise business at any time, it will usually only be able to do so when specific conditions imposed by its franchisor are met.

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