Spadea Lignana Franchise Attorneys has been on both sides of the deal for dozens of franchisor transactions over the last decade. We have represented our franchisor clients who have sold to private equity and we have represented buyers, both private equity funds and strategic buyers, in the purchase of franchise systems.
We have drafted and negotiated asset sales, stock sales and have performed comprehensive due diligence digging into the legal, regulatory and business issues that are unique to franchising. Because our core practice is drafting and updating FDDs, registering our clients in states and drafting, processing and dealing with franchise agreements, we have an unparalleled perspective into the legal health and hygiene of franchisors.
Franchisor Due Diligence
Represent buyers of franchise system helping them analyze, assess and evaluate the contracts, regulatory compliance and general state of the franchise system with a detailed due diligence review.
Prepare a comprehensive franchise due diligence list for the seller to provide relevant documents for review. The documents will include but not be limited to:
- Executed copies of all franchise agreements together with all addenda and ancillary documents, including signed FDD receipt pages. Including all signed Exhibits to the franchise agreements, including the Guaranty, Conditional Assignment of Lease, the Confidentiality and Non-Compete Agreement, and the Conditional Assignment of Telephone Numbers.
- All defaults, non-compliance, termination and nonrenewal notices to franchisees, either pending or implemented in the past 3 years.
- Franchise Disclosure Documents (FDD) for the last 3 years including state registration information, comment letters and approval letters.
- All trademarks, search reports, cease and desist letters sent or received and any current open trademark filings or known infringers.
- Any franchisee relationship related issues, including active or threatened independent franchisee associations, demand letters, complaints or threatening communications from disgruntled franchisees or state regulators.
Prepare a written report of the findings related to the current franchise agreements and any perceived regulatory risks or contract risk posed by any addendums, outstanding relationship issues or state registration issues.
Discuss with the deal team the reps and warranties to be drafted into the final deal documents related to the franchise issues.
Advise on how close the system is in variance to best practices for similarly sized and aged franchise systems.
If you’re considering buying or selling a franchise system, reach out to Spadea Lignana for thorough franchisor due diligence that protects your interests and helps you make informed decisions. Call Spadea Lignana Franchise Attorneys at 215-525-1165 for a free initial consultation.
