Laura was looking to buy a franchise. After investigating a few different franchises, Laura was determined to purchase into a particular hotel franchise system. This was the first time that Laura was buying a franchise and wanted to make sure that all the contracts were in order. The franchise she wanted to buy had multiple lease and license agreements in place.
We reviewed the Sale of Business Agreement, Disclosure Document and the Franchise Agreement. We advised on several areas that needed to be amended by the vendor and the franchisor.
Laura also asked us to conduct thorough due diligence on the franchise, premises and the leases. We revealed a number of issues, in particular, that some of the leases were not renewed correctly, not registered (as required in some Australian states) and not legally enforceable. These would all seriously impact the value of the franchise, its future operations, profitability and ability to sell it.
Laura was also offered the opportunity to walk away as the due diligence had revealed major issues. Laura would receive her full deposit back with our help. We also helped her understand her position, risks, likelihood and consequences of continuing. Laura was determined to continue.
We offered Laura a number of recommendations on how this could be improved to secure and protect her immediate and future interests. We assisted Laura in the lengthy negotiations with the vendor and the bank that was financing her purchase.
With the benefit of our advice, Laura successfully:
- negotiated changes to the documents we recommended;
- signed improved contracts;
- reduced the purchase price by $000,000’s;
- assessed the legal risks and purchased the franchise.