Case Study: Completion of a Franchise Business Share Purchase

by | Jun 8, 2022 | Blog

We recently completed on the purchase of 100% of the shares in a limited company, which was a franchisee of a national lawn care franchise under the brand GreenThumbs.

It was our second GreenThumbs existing franchise purchase for a client, having done one last year. Indeed, this client was recommended to Steven by the original client. We have of course done many other franchise purchase or sales.

Sometimes known as Franchise Resales, on this occasion it was done via a share purchase agreement to buy the shares of the franchisee company.

With a franchise resale, it is usually the Franchisor’s legal team who provides the first draft of the Share Purchase Agreement not the buyer. Acting for the Buyer here, we reviewed the SPA and made changes and comments to it, before sending to the Seller’s legal team for their comment. Once the Buyer and Seller have negotiated the terms of the SPA, it will go back to the Franchisor’s legal team for approval.

The Seller was asked to make a number of key warranties in relation to the company and would have disclosed some issues against some warranties, by producing a disclosure letter.

The target company held a lease, and therefore it was important to get a great  commercial property solicitor involved. Fortunately, as Steven is a consultant solicitor with Nexa Law, there’s plenty to call upon and on this occasion we used John McLean a commercial property specialist based in the West Midlands.

John played an important role in reviewing the lease and property information, as a result of which an issue was highlighted (and rectified) which saved the client potential heartache and financial consequences.

If you are buying or selling an existing franchise business, there’s plenty to consider and you need expert legal advice from lawyers who have dealt with franchising before. So get in touch.

0 Comments

Submit a Comment

Your email address will not be published.

× Live Chat via Whatsapp