The Purchase and Sale of a Franchise in Yorkville, Illinois

 Posted on December 12, 2022 in Business Law

Kendall County Letter of Intent Attorney

The first step in the purchase and sale of a franchise is the letter of intent. The letter of intent is a letter that outlines the details involved in a potential sale. Second, the letter of intent is a formal declaration of a buyer's seriousness in purchasing a seller's franchise. The letter of intent describes the details of the proposed franchise purchase agreement such as the following:

• The earnest money tendered by the buyer

• The financing terms of the deal (cash or a loan)

• Whether the transaction will be an asset purchase agreement or a stock purchase agreement

• The exclusive bargaining writes for the buyer

• The deal will be non-binding until a written purchase and sale agreement is drafted

• Proposed closing date and terms

A letter of Intent is a non-binding agreement, which is essentially a get-to-know-you period where the purchaser may conduct due diligence. Due diligence means that the buyer will want to examine the financial books and financial statements. The due diligence period is a time to review documents such as the following:

• Franchisor Agreements including terms of the Franchisor and Franchisee Relationship

• Commercial Lease or Commercial Purchase Details

• Legal and Bankruptcy History

• Terms involved in the sale of the franchise

In summary, the letter of intent describes the structure and nature of the franchise sale agreement. The letter of intent is a non-binding agreement, which is a good-faith step to consummate the franchise sale. The letter of intent will outline a closing date for the transaction.

Asset Purchase Agreement Attorney for Franchise Lawyer in Oswego, Illinois

An Asset Purchase Agreement is a legal document between a seller and a purchaser. Unlike a Stock Purchase Agreement, the Asset Purchase Agreement includes the sale of assets of the Franchise instead of the exchange of shares of stock or membership interest in an LLC. 

The Asset Purchase Agreement or otherwise known as the “Franchise Purchase Agreement” summarizes the following:

• Describes the key terms involved in the Franchise Sale or Purchase

• List the specific assets being sold and their values (if possible)

• Explains how a commercial lease or commercial property purchase will be handled

• What are the required documents to be tendered by both sides at closing such as guarantees that each party or entity is empowered to negotiate on behalf of their entity?

• Restrictions on a seller’s ability to conduct business within a specific geographic region for a period

• The period that the seller of the Franchise will assist the purchaser

• Key terms which are required by the Franchisor including their approval of the sale

• Non-Disclosure and confidentiality clause related to the purchase and sale transaction

CONTACT AN OSWEGO FRANCHISE SALE OR PURCHASE ATTORNEY TODAY

Purchasing or selling a franchise is a major transaction, which should involve the involvement of a business attorney. The business attorney’s role is to negotiate the key terms and address the concerns of the buyer or seller. The seller or purchase attorney will also receive the appropriate tax clearance certificates from the relevant Illinois departments. Generally, these departments include the bulk sale requirements of the Illinois Department of Revenue and the Illinois Employment Security. Contact Gateville Law Firm at 630-864-5788. When you are purchasing a franchise in the Oswego, Yorkville, Aurora, Montgomery, Plano, Sandwich, and Kendall County and nearby areas call Gateville Law Firm.