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I am a franchisee and in my contract there is a minimum royalty payment payable in a few months. If
If you intend to sell the franchise, it is almost certain that you will need the consent of your franchisor to do so. Usually, franchisors have a right of veto over any proposed sale and in certain circumstances have a preemption right. There are two basic ways of dealing with a sale of a franchise. The first involves the transfer of the terms of your current franchise agreement to your buyer. On this basis, he/she will inherit the existing terms of the franchise and so inherit the minimum royalty payment obligation. Clearly, if this payment obligation is triggered because of the seller franchisee’s failure to achieve appropriate sales, the liability for the minimum royalty payment may be a matter for negotiation between seller and buyer. The second option is for the franchisor to agree to grant the buyer a new franchise agreement. Clearly, in this case the franchisor can determine what terms (including minimum royalty) it might impose on the new franchisee.
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