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I’m happy running my franchise business, but the franchisor wants to buy it back. Legally, can he do
Franchise agreements do not normally allow a franchisor to buy back a franchisee’s business on demand. So the first thing to do is check if your agreement allows this. If there is nothing allowing the franchisor to buy back your business on demand or against your will, you are under no legal obligation to sell it to him. If your franchisor insists on buying it back, you should take advice from a solicitor affiliated to the British Franchise Association, who can help protect your position. Although uncommon, if your franchise agreement does allow the franchisor to buy back the business on demand, you may have to sell it to him. Consult a bfa-affiliated solicitor, who can help make the best of this situation. In terms of finding the sale value of your business, your franchise agreement should state a valuation method. You may want to discuss this with your accountant. Whether your franchise agreement allows it or not, try to find out why the franchisor wants to buy your business back. It may be because he has wider plans for his network, or perhaps it is an indication that he is unhappy with your franchise’s performance. Consider if the purchase is being offered as an alternative to termination. Whatever the franchisor’s reasons and whether you end up accepting or rejecting the offer to buy your business, this is a time to take advice from a solicitor experienced in franchising, who can help guide you through.
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