Can I sell my franchise to someone else?

Acquiring a franchise grants you several important branches in the property rights bundle of sticks. Chief among these is your right to re-sell your franchise. Franchise agreements that place absolute barriers on your right to sell your franchise are void as against public policy favoring franchisee transfer rights. But that does not mean you are free and clear to re-sell your franchise with no input or oversight from the franchisor.

Almost all franchise agreements will vest the franchisor with a right of first refusal, which means the franchisor has the first (and last, in practice) opportunity to purchase it from you when you want to sell your franchise.  In practice, a franchisor can invoke its right of first of refusal once you present them with a written offer from a third party to purchase your franchise. The franchisor then has the right to approve or disapprove the third party or to match the third party offer with one of its own.

In addition to the right of first refusal, many franchisors also impose transfer fees.  These fees can be thousands of dollars, and some franchisors require additional fees for the mandatory training of new franchise owners.  Even if the franchisor does not retain a right of first refusal or impose transfer fees, keep in mind that you may have to compete with your franchisor when you’re looking for a buyer if they are still actively seeking franchisees.  This can make it harder to find someone interested in purchasing your particular franchise or force you to accept a lower offer.

In negotiating your franchise agreement, you hopefully hired an experienced franchise lawyer to represent your interests. He or she can review your franchise agreement with you, explain your rights and restrictions in selling your franchise, and help you negotiate for the best possible terms.

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