Legal advice for buying a franchise resale

When purchasing a franchise resale you will not necessarily receive the same disclosure document from the franchisor as you would normally receive if you were a new franchisee. As you will be purchasing a franchise resale, you will be assuming an existing agreement without modification. The franchisor may not necessarily need to provide you with a pre-sale disclosure as you will be signing a transfer of the seller’s agreement.

If, however, the franchisor is offering you a different agreement to that of the existing franchisee, you should also receive a copy of the franchisor’s disclosure document. Make sure you study this new franchise agreement and disclosure document very carefully as it may contain very different fees and terms from the original agreement signed by the seller of the franchise business and could impact the worth of the business considerably.

Please beware! It is of the outmost importance that your legal documents are examined and explained by an attorney with franchising knowledge as only he or she will be able to provide you with the correct guidance and advice. Although it may be tempting to have your house closing attorney look over this as it may be less expensive initially, the reduced legal fee may prove to be very expensive to you later on. It is critical that your attorney has the working knowledge of the franchise rules to be able to protect you properly.

Buying a franchise resale can be a fantastic business start-up opportunity for you, but you need to make sure that you do your homework first before you part with your hard earned dollars!

Got a question to ask?

Steve Seddon - Westpac

Steve SeddonSteve is a Senior Business Development Manager with Westpac. He specialises in the franchise sector and is on the FCA's Western Australian Committee.

To ask Steve Seddon a question click here.

Tim Kilham - Lanyon Partners

Tim KilhamTim is a director of Lanyon Partners Chartered Accountants and heads up the franchising area of that division.

To ask Tim Kilham a question click here.

Alan Branch - Optivance 360

Alan BranchAlan is an experienced consultant, commercial lawyer and franchise expert recognised for his skill in negotiating and completing business set up and expansion projects.

To ask Alan Branch a question click here.

Vicki Prout - Sherpa Group

Vicki ProutVicki has been involved in the franchising sector as a Franchisor, Franchisee, and Consultant. She is currently an international consultant guiding businesses through their franchising journey.

To ask Vicki Prout a question click here.

Robert Toth - Wisewould Mahony

Robert TothRobert has over 25 years of experience as a business lawyer and consultant. He writes regularly in franchise and industry journals and is a recognised leader in franchise law in Australia.

To ask Robert Toth a question click here.