What’s a franchise resale?

A franchise resaleis when you buy an existing franchise business as a going concern from a franchisee with the rights to operate the franchise. The sale could be of a company or of the assets of the franchisee’s business. It is usual for a franchisee to be given the right to sell its franchise business, and this right should be set out in the franchise agreement.When you buy an existing franchise, you will be dealing with two parties - the franchisee from whom you are buying the business and the franchisor of that franchisee. You will negotiate the purchase price and terms of the sale with the franchisee, but you will still need to be approved by the franchisor.Most franchises require the franchisee to be trained and some require a specialist area of knowledge. The new franchisee will be required to undergo any necessary training, and provide the same standards of service as if there had been no change of franchisee. The new franchisee will also have to be acceptable to the franchisor as if he had applied directly to the franchisor.You should make the same checks on an existing franchise as you would do with the purchase of a new franchise. In particular, you will want to evaluate the seller’s trading history and its reasons for selling the business. If premises are necessary for the franchise, you may be required to take over the existing franchisee’s lease. You will also need to check if you will have to pay any fees to the franchisor on joining the franchise; for training, for example.