franchising aspects Oct, 13 2009

Character playingz transfer of franchise

Do you feel that you can not run your franchise anymore. Are you looking at the proposal of transferring it to someone else. The franchisor holds the key to the affirmation of the transfer. Wondering how. Read on

By Neha Malhotra
Sub Editor, Franchise India Holdings Limited, Web Division
Character playingz transfer of franchise

The transferring of a franchise to a third party by the franchisee needs to undergo a set procedure. The transfer cannot be undertaken without the franchisor’s consent. Here is what you need to keep in mind in case you are thinking on the lines of transferring your franchise in to someone else’s hands and are hoping for a positive reply from the franchisor.

Presenting a written request

The process of transferring your franchise will begin by giving a written request to the franchisor for the same.  It is mandatory to submit a written request else it would be held null and void.

What the franchisor expects?

After you have submitted the request, the franchisor has 60 days to act upon it. It is at his discretion to accept or reject the request. However, he can cancel the request only when he has a valid reason else he is not liable to do so.  The transferee must comply with the current qualifications for a new franchisee that have been set by the franchisor. The transferee is expected to undergo and complete the training program put in place by the franchisor. The transferee must also have enough financial means to perform the daily business operations without any hassles. The franchisor on his part should not discriminate on the basis of caste, race, religion or sex when making his decision.

Franchisee’s obligations

The franchisee on his end also has to meet certain prerequisites to get a go ahead signal from the franchisor. A set amount of transfer fee is to be paid to the franchisor by the franchisee as per the franchise agreement. Also in case if  there are any pending dues at the franchisee’s end then the franchisee is expected to clear all of them before applying therefore not leaving any loopholes for rejection. After the completion of the process, the franchisee does not have the liberty to let out any of the franchisor’s trade secrets to anyone outside the business.

To achieve what you are looking for goes by one simple statute: If you go by the rules, you sure will triumph. So just get everything in place from your end and be sure that you will get the expected approval.

Related: Franchise royalties proving beneficial

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