ShareAndGoShareAndGo

Guide

Selling a franchise: one file for the buyer and the franchisor.

Selling a franchised location in the United States, whether a restaurant, a fitness studio, a home services territory or a retail store, is a business sale with a third party at the table. The buyer has to satisfy you, and the franchisor usually has to approve the buyer before the franchise can transfer. Most franchise agreements set out a transfer process, and many give the franchisor a right of first refusal.

This guide covers the documents usually involved and how to share them with the buyer, its lender and the franchisor. It is general information, not legal or financial advice. Read your franchise agreement, and work with an attorney who knows franchise transactions.

Start with your franchise agreement

The transfer section of your franchise agreement typically explains what the franchisor needs before approving a sale: an application from the buyer, financial qualifications, training, a new or amended franchise agreement, a release, and a transfer fee. It may also require remodeling or upgrades before or after the transfer, and may give the franchisor the right to buy the business itself on the same terms.

The franchisor will also usually have its own process for the buyer, often including its Franchise Disclosure Document. Ask the franchisor early what it needs and how long approval usually takes, so the purchase agreement timeline is realistic.

Documents buyers usually request

Performance

  • Three years of financial statements and business tax returns, and the current year to date.
  • Sales reports from the franchisor's point-of-sale or reporting system.
  • Royalty and advertising fund statements, showing fees paid to the franchisor.
  • A list of equipment and inventory included in the sale.

The franchise relationship

  • The franchise agreement, amendments and any area development agreement.
  • Recent inspection or audit reports from the franchisor, and any notices of default.
  • Territory maps or protected area descriptions.

The location and people

  • The premises lease and whether the landlord must consent to assignment.
  • Licenses and permits that apply to the location.
  • An employee list with roles and pay, shared at the stage your attorney advises.

A sale room with three audiences

  1. 1

    Organize for the buyer

    Build folders for financials, franchise documents, the lease, equipment and staff.

  2. 2

    Give the franchisor its view

    Put the franchisor's development or transfer team in its own group with the folders it reviews.

  3. 3

    Add the lender

    Many buyers finance the purchase. The lender's group sees only the financials and the lease.

  4. 4

    Track the transfer checklist

    Turn the franchisor's transfer requirements into a document request list and assign each item.

Protecting your figures until the deal is real

A prospective buyer may be another franchisee, a competitor or someone who will never close. Share summary figures first, and open the detailed financials and the staff list once a letter of intent is signed. With groups, you can open a folder to one buyer without changing what anyone else sees.

Make detailed folders view-only. Readers see pages watermarked with their name, email address and the date, and the original file is never sent to their browser. Ask each visitor to accept your confidentiality terms before entering, and keep the record of who accepted and when.

The audit log records every view, download and invitation, chained so alterations are detectable. If a buyer walks away, revoke their access in one step and you still have the record of what they saw.

Questions

Can the franchisor see everything the buyer sees?
Only if you allow it. Each group sees only the folders you choose.
Can a buyer's broker access the room?
Yes, in the buyer's group or a group of its own.
Can we pull sales reports straight into the room?
Export them from your reporting system and drag them in. ShareAndGo reads and tags each document.

Related guides

Preparing an asset sale

How most franchise locations change hands.

A commercial lease negotiation

The lease assignment that comes with it.

A business loan application

What the buyer's lender will need.

All guides

Every business process we cover.