Selling, Assigning or Transferring Ownership of an Existing Franchise in NJ
Selling an existing franchise involves a number of additional steps your lawyer must address that makes a franchise closing more complicated.. The first step is selling your franchise and notifying your franchisor in writing.
First off recall that you have a franchise agreement in place that imposes a number of conditions to your sale. First is notice. The notice you give to your franchisor must (generally) include (1) the transferee’s name, address, financial qualifications and (2) business experience during the previous five (5) years. But remember, the franchise agreement you originally signed will dictate the precise terms of notice you must give.
The failure to notify the franchisor before a transfer, assignment or sale permits a franchisor to claim a breach of the franchise agreement and to terminate the franchise relationship with you. You will also likely be subject to penalties and/or damages.
After you have given notice, the franchisor generally has sixty (60) days to evaluate your request and send a written response either approving the transfer, imposing conditions to the transfer or setting forth the reasons for denying the transfer. If the franchisor does not respond to the notice within sixty (60) days, the law deems the transfer approved by the franchisor, unless the franchise documents read the differently. Again, pull out your franchise agreement and become familiar with its provisions concerning a sale or transfer.
In NJ a commercially good faith standard exists in the conduct and relations between a franchisor and franchisee and the franchisor must act in good faith in their treatment of their franchisee. This good faith standard also applies to the sale of the franchise.
TESTIMONIAL
In my negotiations with a large international corporation, Fredrick P. Niemann worked with me to the end. They were thoughtful and proactive in identifying the issues of concern to me, issues I hadn’t even thought of. I was very satisfied with the services they rendered.
Cheryl Scheidler, Wall Township
Fredrick P. Niemann Esq.
For more information on buying or selling your NJ franchise, you may want to review in further detail our page on Franchise Law, or you may call Mr. Niemann toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com to schedule a convenient consultation about the sale of your NJ franchise.
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Selling a Business Attorney