Introduction
Purchasing an existing franchise can be a great way to get your feet wet in the franchise world. But before you take this step, it is important to do your due diligence and make sure that you are making a sound financial decision. In this blog post, we’ll discuss the top three things that all potential franchise buyers should do before signing on the dotted line.
Review the Franchise Agreement Carefully
The first thing you should do when considering buying a franchise is to look closely at the franchise agreement. This document outlines all of the obligations of both parties and should be read with care, as it will have significant implications for your business operations going forward. Make sure that you understand every clause in detail and that there are no surprises down the road. If you don’t feel comfortable with any part of the agreement, bring it up with the franchisor before signing on the dotted line. Instruct specialist franchise lawyers like GZ Legal to help you minimise risks.
Decide Whether You Should Do a Share Purchase or an Asset Purchase
When purchasing an existing franchise, you will need to decide whether to purchase the entire company (known as a share purchase) or just its assets (an asset purchase). A share purchase may give you greater control over how your new business is run but also comes with more risk as you’ll be buying into any liabilities associated with the company. An asset purchase may give you more flexibility but will not include any of the goodwill built up by prior owners and may limit your ability to access certain resources such as existing customer relationships and intellectual property. Ultimately, it’s important to weigh both options carefully and to seek the advice of corporate lawyers such as GZ Legal.
Conduct Thorough Legal Due Diligence
The last step in buying an existing franchise is conducting thorough legal due diligence. You’ll need to review all relevant documents related to past litigation or disputes involving either party, as well as any licenses or permits required by local laws or regulations. It’s also important to determine whether there are any tax implications associated with taking over ownership of an existing business. Taking time to conduct this due diligence upfront can save you time and money down the road if unexpected issues arise after closing on a deal. Corporate lawyers like GZ Legal can help you by conducting thorough legal due diligence. Contact GZ Legal today.
Conclusion
Buying an existing franchise can be an exciting opportunity; however, potential buyers need to take some important steps prior to signing on the dotted line. The three most important things that all prospective buyers should consider doing before purchasing a franchise include carefully reviewing all documents involved in the deal; deciding whether they want a share purchase or asset purchase; and conducting thorough legal due diligence into all relevant aspects of their transaction beforehand. By taking these steps, potential buyers can ensure that their deal goes smoothly and that they make a sound financial decision for their future success in franchising!
