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Hi, I am talking to someone who is selling existing franchise and I am interested in buying it. Need guidance what I need to take care while transferring the franchise in my name . Do I need to involve any law firm for checking any bad debt or my CPA will be able to manage it.

 

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A few hours of a commercial transaction attorneys time would probably benefit you, especially in regards to the transfer of ownership. I would recommend you find someone with franchise experience so you understand the franchise agreement you are inheriting/executing.

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Do not try to do this on your own. Hire someone to help walk you through the process. It might cost you some money now, but its likely to save you a lot of money/headaches in the future.

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Thanks , appreciate your guidance.

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You should definitely hire *somebody* to advise you on the transaction. Just to make sure proper negotiation is done.

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OP, good luck. Please keep in mind that many franchise transfers/sales require the approval of the franchisor. Concur with hiring a commercial transaction attorney. Many, at least around here, have hourly rates or flat fees structures based on transaction size.

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Make sure to check if you would be subject to any different rules as a new franchisee. My co-worker owns a Tropical Smoothie franchise that seems pretty successful partly because he has lower franchise fees and isn't subject to some of their newer franchise rules. He stated that if he sold it the new owner wouldn't have those same benefits.

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Thanks all of you ! It was really helpful !

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Do your due diligence.. You will need to see his tax returns to see if it's been profitable.. There's a good chance he has two sets of books, one showing a loss for tax purposes and another set of books showing a huge profit to show the buyer. Assume its somewhere in between, why would someone sell a highly profitable franchise? Assume all answers are lies unless he has concrete proof.

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wraithtech said:   Make sure to check if you would be subject to any different rules as a new franchisee. My co-worker owns a Tropical Smoothie franchise that seems pretty successful partly because he has lower franchise fees and isn't subject to some of their newer franchise rules. He stated that if he sold it the new owner wouldn't have those same benefits.
  
Correct, a lot of the early franchisees take  on more risk=more negotiating power w/franchisor..

That being said. What's FWF consensus for a low risk, high return (say 15%)  non food franchise that you can "buy" for around 1 million$. Willing to put in the hard work, manage etc...

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letsspendlotsofmoney said:   Do your due diligence.. You will need to see his tax returns to see if it's been profitable.. There's a good chance he has two sets of books, one showing a loss for tax purposes and another set of books showing a huge profit to show the buyer. Assume its somewhere in between, why would someone sell a highly profitable franchise? Assume all answers are lies unless he has concrete proof.
  Health reasons?  Tired of the long hours?  Divorce?  New kid? other tragedy in family?  Decided to moce to tropics?  Retirement? Lost faith in franchisor, disagrees with policies? Can't find competent workers and no on in his family want s to work for him anymore?

Can I stop now?

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My money's on "Once I accounted for paying myself or a manager to run the place, the business made almost nothing."

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