How do you go about resale of a franchise?

Before resale of a franchise can occur in California, the franchisee and franchisor must abide by the Franchise Investment Law. According to the California Department of Business Oversight, the seller must provide the prospective franchisee with an offering circular prior to the purchase. This document is required by law to describe the rights and liabilities of the franchisee, the franchisor’s obligations, and a description of the franchise business. The offering circular must also list the names and types of franchises the franchisor currently offers, and include a statement from the franchisor that details their financial condition. Once the franchisee has received the offering circular, they must then sign a written agreement that specifies the terms of sale. The agreement must also include the terms of the franchisee’s existing franchise agreement, as well as any other information required by the Franchise Investment Law. The California Department of Business Oversight also recommends that franchisees have a lawyer review the documents before entering into a resale agreement. It is also important to take into consideration any fees the franchisee may incur, such as transfer fees or registration fees. Finally, the franchisor must file a statement of the sale with the Department of Business Oversight within 30 days of the closing date. This serves to protect the franchisee’s rights and ensure that state laws are being properly followed. Resale of a franchise can be a complex process in California. It is important to thoroughly read and understand all documents, seek professional legal advice if needed, and file the necessary paperwork in a timely manner to ensure the resale of the franchise is in compliance with state laws.

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