Buying a franchise is a big decision. It is difficult enough when it is a green field site. When it is a “used franchise” that has already been operated by a franchisee and is being sold on it is even more complex.
This is because you are undertaking two totally separate transactions. The first transaction is the purchase of the right to operate the business under the Franchisor’s brand and using its know how. The second is the purchase of an existing business , with all of its potential liabilities and creditors. Each transaction is related to the other but is with different parties. The franchise purchase is with the Franchisor. The business purchase is with the outgoing franchisee ( unless the franchisor has already bought it from the former franchisee and is selling it on to you). The two transactions need to be co-ordinated so that they both complete at the same time. Read full post.