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Structuring a Refranchising Program
As used in this article, “refranchising” means the sale of company-operated units to purchasers who become franchisees operating the units as franchise stores. Frequently the franchisees will also purchase the right/obligation to develop additional stores pursuant to a development agreement, thus increasing the upfront revenue to the seller or franchisor and providing for the construction of new units at the expense of the new franchisee. The sale may also involve the obligation of the purchaser to remodel the purchased units, once again allowing the seller or franchisor to achieve an overall upgrading of its units using the cash of the buyer, rather than its own resources. Ideally, the royalty revenue from the newly franchised units will replace the cash flow and profits lost from ceasing to operate the units as company stores, while the purchaser's or franchisee's new development will ultimately increase revenues. Sales proceeds and exclusive territory fees and development fees received at closing can be used to increase current earnings, reduce debt, and free up lines of credit for additional company store development in other markets.
There are several things that a franchisor can do in structuring its refranchising program to reduce the likelihood of disputes and litigation. This article discusses the presale market identification and internal due diligence and initial marketing process that culminates in the execution of a letter of intent (“LOI”).
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.
Protecting Innovation in the Cyber World from Patent Trolls
With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.