Monthly Archives: August 2013

There are various reasons that a business owner might want to wind up the business and dissolve the company. It may be that the owner has sold the productive assets and the company serves no further useful purpose. It may be that the company isn’t making money, or not enough money, and the owner wants to finish with it before it starts losing money. It may be that the company is owned by two or more owners who no longer agree and want to liquidate the company and distribute what’s left. It may be that the company’s assets are not saleable and the owner wants to go into a different line of business or just retire. Whatever the reason, a going-out-of-business concern should prepare and follow a plan of dissolution and complete the formalities of ending its life. Otherwise, the principals may find themselves subject to unexpected liabilities or other unwelcome surprises.

WHEN PURCHASING A FRANCHISE, a buyer has all the concerns pertaining to a non-franchised business, plus an additional set of concerns and obligations. The terms of the seller’s agreement with the franchisor will require the franchisor’s consent to the sale. In evaluating the transaction, the franchisor will consider the terms of the sale, the qualifications of the buyer, and the interplay between the (assumed or new) franchise agreement and any assumed or new premises lease. The franchisor will also require payment of a transfer fee and whatever else it generally requires from new franchisees. Many franchisors require that operators be trained and credentialed in operating the particular franchise. If the buyer is not already qualified as an operator, he may be required to successfully complete a training program which may last several days or weeks, before the franchisor will approve the sale. Additionally, the franchisor will require that the buyer meet its standards for financial soundness and good character.

PURCHASING A BUSINESScan be an exhilarating dream for many buyers, but unfortunately it doesn’t always work out as planned. While the buyer is primarily focused on running the business successfully after closing, the purchase process itself may be fraught with anxiety. The buyer wonders how to be sure that he is getting what he thinks he is, how to avoid being responsible for claims and other liabilities, and how to avoid unpleasant surprises when he takes over.