By Emma Lusty
It is a common misconception that a franchise network with a high level of resales is a bad sign. In fact, a healthy resale market is a good sign. It means that franchisees are able to build up profitable businesses which can be sold to recover a return on their initial investment and a constant influx of new franchisees means that the network is not stagnant – new, keen and eager franchisees bring with them fresh ideas and motivation.
A well drafted franchise agreement will give the franchisor the right to require its franchisees to follow its procedure on resales and to use the franchisor’s standard documentation. In our experience, very few franchisors take advantage of such provisions, but it really can be worthwhile, not only for the franchisor, but also for the outgoing and incoming franchisees.