Denver Colorado Franchise Attorney Martin A. Mansfield, Jr.

Purchase and Sale of Ongoing Franchise

The usual method for the purchase and sale of an ongoing franchise is an asset purchase and sale:

Purchase and Sale of Business Assets:

Most purchase and sale agreements for franchised businesses are known as Asset Purchase agreements.  These allow for fine-tuned control of precisely what aspects of the business are transferred.  The assets identified in the agreement are those sold; everything else is retained by the prior owner.  This type of agreement can be used regardless of the business format of either the Seller or Purchaser.  The Seller's debts, stock equity if applicable, other contractual agreements, and even ability to continue as a non-competing business, are unaffected and not generally transferred to the Purchaser.  This form of agreement makes a potentially highly complicated transaction relatively straightforward.  Using this form is also likely to save on attorney fees, because the contract can protect the parties from a more limited number of risks than those in other transaction forms.

A less used option is a stock purchase and sale:

Purchase and Sale of Stock (Corporate Transactions):

Sometimes, the Seller and Purchaser wish the entire corporate business to be transferred as a going business and use the Stock Purchase agreement to accomplish this.  On its face, the sale of the stock seems to be a simple solution, but because all the debts, liabilities, contractual and employment obligations, etc. of the business are transferred right along with it, the Purchaser needs many risk protections built into the agreement, and Purchaser's attorney must do considerable due diligence to be reasonably sure that unwanted problems that could become the Purchaser's responsibility are either not transferred or are indemnified against by the Seller. 

Fees for these Matters:

For asset purchase transactions, I can offer a flat fee of $2400.  At your option, you may also retain me at my $325 hourly rate.

Stock purchase transactions are more time consuming, and therefore my flat fee is $3600, or you may retain me at my hourly rate.

Please remember that an attorney can only represent one side to the transaction, the buyer or seller.

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