Closing my Franchise

[imonlyfamous]

I currently own a franchised coffee shop and have decided to sell. I have an offer for my asking price, but the problem is that the new owners don't want to continue as a franchise (and I don't blame them). The franchising company, however, has sent us a completely over-the-top list of demands in what we have to do to de-identify, including not using any similar themes or images (or colors) despite the fact that there is at least one competitor in the market that has the same theme and does better than this company.

My question is, I know that they can't force me to remove all of these items simply in order to sell/close my business. However, what do I need to know/consider in selling? What possible repercussions can there be if I simply sell off the business? Isn't all liability going to be in actually using their trademarked items and not in selling them, since I'm not selling them on a retail level or marketing the sale?

 

[CafeBlue]

You better carefully read your franchise agreement and lease. Get some qualified legal advice, too.
You may not even hold the lease, and therefore may not be entitled to sell anything but equipment and inventory. The fixtures and leasehold improvements most likely belong to the franchisor and landlord. If the franchisor is as undesirable as you indicated, your potential buyer may not want their affiliation either and therefore may cooperate with you to meet the franchisor's demands.

 

[Coffee Guy]

Ouch! CafeBlue is correct, your best bet is to go over your original franchise paper work, then contact an attorney that specializes in franchises. Believe me, franchors generally have themselves protected fairly well. So if you want out, you may have to spend a little money to do so. Additionally, if you have a buyer on the hook, this will have to be disclosed to them. In any case good luck 8)

 

[jpscoffee]

The franchising company, however, has sent us a completely over-the-top list of demands...

Franchises always will have some type of stipulations in the original agreement concerning the selling of the franchise. The franchise must approve of the new buyer, how to get out of the agreement, etc. Anything that is in writing that they gave you and you signed makes this "over-the-top" statement null and void. It doesn't matter what you think it is, if the agreement says it is their right to demand things of you, they have the right (right or wrong). Then it depends if and how far you want to push things while risking legal action.

My question is, I know that they can't force me to remove all of these items simply in order to sell/close my business.

Whatever is in the agreement, they can force you to do.

However, what do I need to know/consider in selling? What possible repercussions can there be if I simply sell off the business? Isn't all liability going to be in actually using their trademarked items and not in selling them, since I'm not selling them on a retail level or marketing the sale?

I highly advise you to contract the services of a qualified attorney. If you make a mistake or a rash decision, you could subject yourself to a lawsuit or other actions that would be detrimental not only to you, but to your desire to sell your store. Work with the franchisor. Talk to them, assure them you will fulfill your resposibilities and ask them to help you achieve your goal and theirs (smooth transition, no loss of goodwill, etc.).

 

[cafemakers]

I highly advise you to contract the services of a qualified attorney. If you make a mistake or a rash decision, you could subject yourself to a lawsuit or other actions that would be detrimental not only to you, but to your desire to sell your store. Work with the franchisor. Talk to them, assure them you will fulfill your resposibilities and ask them to help you achieve your goal and theirs (smooth transition, no loss of goodwill, etc.).

I agree completely with you Jack - sent him this same recommendation by email back in March when he posted the original message. I couldn't find his reply, but as I recall, he wasn't too happy about it.

Any updates from "imonlyfamous?" Curious what happened...

Andrew

 

[imonlyfamous]

I highly advise you to contract the services of a qualified attorney. If you make a mistake or a rash decision, you could subject yourself to a lawsuit or other actions that would be detrimental not only to you, but to your desire to sell your store. Work with the franchisor. Talk to them, assure them you will fulfill your resposibilities and ask them to help you achieve your goal and theirs (smooth transition, no loss of goodwill, etc.).

I agree completely with you Jack - sent him this same recommendation by email back in March when he posted the original message. I couldn't find his reply, but as I recall, he wasn't too happy about it.

Any updates from "imonlyfamous?" Curious what happened...

Andrew

You never sent me an email regarding this post, and I certainly never sent you anything regarding it. The only email I've ever received from you was in response to my very first post on these forums asking for advice, when you decided to spam me with offers of paid consulting services and told me how useless the suggestions of this forum would be to me.

No, I wasn't very responsive to that.

Back on subject, though, I'm not dense or lacking in common sense - there is no stipulation in the franchise agreement regarding dissolution of the business, and when they caught wind that I was considering selling - or rather, closing and dismantling the business as the new owner would not be utilizing our name or product and we don't own the space - they sent us a hastily prepared Word document with their demands that was (amusingly) dated the night prior to receipt.

I'm actually concerned about the legality of a business dissolution when operating under a franchise agreement, especially in regard to the fact that the new owner would be opening his own shop in the same space, and was hoping someone here would have some concrete, constructive advice that doesn't consist entirely of "get a lawyer." If you have some experience in this arena, I'd love to hear from you. If not, please don't bother trying to beat common sense into me - either it's there and you're wasting your time or it's not and you're wasting your time.

 

[Coffee Guy]

Wow imonlyfamous:

Take a step back and chill for a moment. You asked for some opinions regarding selling your location and trying to get out from under the franchisors demands. It's one thing to ask for opinions and another to ask for advice. Be careful not to paint with such a broad brush. Unless anyone on this forum is an attorney that specializes in franchises, then your questions may not be answered to your satisfaction. Did you know what you had gotten yourself into when you first bought in to the franchise? If so, then those should have been some of the questions you should have asked them before you signed the dotted line. We all make mistakes, and some can be very frustrating. However, in this case if you really want out, again I would suggest that you hire a professional to do the jon.

 

[cafemakers]

However, in this case if you really want out, again I would suggest that you hire a professional to do the job.

This guy is a piece of work. He gets angry when I tell him that he probably won't find the answers that he wants for free; he gets angry when he isn't getting the answers he wants for free. As he referenced in my prior email message to him, I'm concerned that he'd rather use free advice from a bulletin board service than hire an attorney or other professionals to protect him. I have a feeling that this one is going to pinch his pennies right into bankruptcy court.

Some guys have to learn the hard way.

 

[Coffee Guy]

I agree, there are a lot of folks that what something for nothing. And you know what? They deserve what they get. 8)

 

[cherylann324]

After reading several posts and responses in this forum it seems that we have a decisive division in the participants involved in each posting.

On one hand you have the beginners, and on the other you have the professionals. The professionals being successful roasters, trainers and shop owners. The beginners are in several different stages from the concept stage to the I'm almost ready to open stage.

What bothers me is the tone of the posts. The professionals sometimes have a condescending attitude that is thinly disguised as "Spend some money if you want the answer to your questions." IMHO I think many of the beginners on this forum already know that they need to and probably will have to spend the money to hire someone to answer the questions that they have posted. They were just hoping to get some feedback from anyone that has any knowledge or experience in the area they need help figuring out.

I have posted some answers to posts on this board, only to have the professionals make me feel like I was unqualified without saying it, of course. It has made me less likely to offer my opinion in the future, and I see that many posts go unanswered. Hopefully this is not the reason.

This forum is a great opportunity for everyone registered to exchange ideas, right or wrong. Of course, legal advice is out of the question, but friendly advice would be appreciated. Experience is often the task-master that is best when related instead of endured.

Perhaps I am incorrect in my opinion? Sorry if I offended anybody, but I would like to see more friendly advice offered to both me and all.

 

[cafemakers]

What bothers me is the tone of the posts. The professionals sometimes have a condescending attitude that is thinly disguised as "Spend some money if you want the answer to your questions." IMHO I think many of the beginners on this forum already know that they need to and probably will have to spend the money to hire someone to answer the questions that they have posted. They were just hoping to get some feedback from anyone that has any knowledge or experience in the area they need help figuring out.

A very good observation.

I do not believe that "the professionals" (myself included?) are holding valuable trade secrets for ransom; rather, I find that when one of us recommends "hiring a lawyer or business consultant," we believe that the question asked by a novice is too complicated, delicate or important to adequately addressed in a 5 minute email message. Messages about finding a service technician for your home espresso machine or discussing a coffee you sampled this weekend are well-suited for a public discussion group; addressing serious business issues are probably not.

For example, if you were posting the message "I found an odd-shaped mole on my right forearm, what should I do?" to a medical forum, readers would likely suggest that you go to see a doctor rather than write long and complicated messages to help you diagnose your malady -- and yet, it seems that novices here are often looking for a do-it-yourself skin cancer diagnosis and treatment remedy they can apply without the cost of a doctor and hospital.

The mole could be inconsequential or it could be life-threatening. We really don't have enough information in a forum post to know which one applies to you and certainly cannot make suggestions of how you can treat it yourself.

This is of course an extreme example, but the same principles apply to your business. When a novice asks a seemingly innocent question "how should I approach selling my business," he or she may be blissfully unaware that there are very complicated and important financial or legal issues involved. Maybe it's a simple transaction, maybe not -- we really don't know until spending several hours analyzing the situation, your background, legal commitments and other entanglements.

Knowing the number of layers of information needed and potential professional liability involved in making such suggestions without all of the facts, busy professionals will probably not dare to respond to such messages other than suggest you "hire an attorney." In these situations you can not and should not expect more.

A real professional will make suggestions to help you, such as seeking someone that can take the time to understand your situation and give effective personalized advice; you should be weary of anyone that fires off tips and tricks from the hip without fully knowing how you will be affected.

Remember that the wrong advice for free is far more expensive than the right advice that you've paid for.

 

[Coffee Guy]

Well stated CM. cherylann324 also makes some good points, however, keep in mind this is a forum for opinions and some may serve better than others. And yes, there are both professionals and non professionals here. That's what makes posting fun, at least for me. If I share information with others it's not to stick out my chest and say that I know more than you, it's more like I have some experience and I am willing to share. Although CM's example is a little extreme ...It's true, you would not seek advice from a forum especially if you seek an answer that could affect your well being, you would seek a professional. If you go through the archives of some posts, you will notice that some of the same questions get recycled by others all of the time. But everyone continues to answer them any way instead of blowing up because the question has been asked again. So I might suggest that if you have a question or comment that can be of benefit to others continue to post. That's why we are here...

 

[CafeBlue]

On one hand you have the beginners, and on the other you have the professionals.

What bothers me is the tone of the posts. The professionals sometimes have a condescending attitude that is thinly disguised as "Spend some money if you want the answer to your questions." IMHO I think many of the beginners on this forum already know that they need to and probably will have to spend the money to hire someone to answer the questions that they have posted. They were just hoping to get some feedback from anyone that has any knowledge or experience in the area they need help figuring out.

I have posted some answers to posts on this board, only to have the professionals make me feel like I was unqualified without saying it, of course. It has made me less likely to offer my opinion in the future, and I see that many posts go unanswered. Hopefully this is not the reason.

Sorry if I offended anybody, but I would like to see more friendly advice offered to both me and all.

CherylAnn;
Thanks for your posts and fresh POV. You made several acute observations and posted well-reasoned and well written response. Not everyone - professional, amateur or wannabee - offers wisdom. It is a free and open forum, so some bias, opinionated response, ill-advised posts, lack of clarity, mis-information and so forth is expected - along with diverse levels of knowledge and various levels of willingness to "share for free". Some folks are more collaborative and cooperative than others, yet one of the facets of the coffee industry that I enjoy is the general willingness to share information and experience. That said, many folks are free to share common experience while less willing to give hard-won knowledge away.
Lots of professional advice (books, classes, workshops, training, consultants, video training, seminars, etc.) is worth paying for - why should the professionals give value away?
Some pro's are not successful and some beginners are wise beyond their experience. Variety may be the spice of life, but one needs to filter advice with judgement. Balanced judgement you apparently have, while some posters apparently do not.
The tone and content quality of posts varies for both questions posted and responses. This is the nature of forums. If you can disregard the negatives, I think you will find a balance of positive support. The internet has provided many opportunities for collaborative change, but caveat emptor - free advice is sometimes not worth even as much as one paid for it! Amazingly, some folks wouldn't recognize solid advice at any price and may even refuse guidance even while facing certain disaster otherwise.
I hope you continue to post both questions and responses. Your feedback and opinions are appreciated. I wish more of the members of the various forums I surf would participate often and freely. I get more from participation than from merely lurking.
Many posts are un-answered because they do not ask a specific question. Some are ignored as time-wasters. Some are ingnored because the answers are already available with a simple "search".
How could a happy chick be offensive? :grin:

 

[cherylann324]

Hi All!

Entertaining responses, interestingly divided.

CafeBlue, I just wanted to thank you for your viewpoint. You are the only person to respond to a question that I posted in a different section "Shops & Cafes." The question was about marketing, and I received an invaluable response that I will not only be able to actually use in my business, but I feel like it was valuable professional advice that I could have easily spent many dollars to receive. Thank you again, that's what I would like to see for more questions posted.

I do read the other posts that are along the lines of what I need to know so I don't ask redundant questions, but I don't go too far back. I am always hoping to see someone else's experience and how they handled their problem.

I do agree that the posts are often vague. With a responders help, maybe together they can narrow it down to specifics. Or, if someone is astute enough to find this web site, then perhaps they are astute enough to be pointed to a list of inital web sites that include information on books, videos, classes, etc. that will help them get started. Every question deserves an answer!

And as to my opinion on the original question posted, how to handle the franchisee situation. My first question would be: "What are you selling? Equipment that has any association with the franchiser? Colors or logos?" and my second question would be "Did you have an attorney involved in the original agreement? Perhaps they could tell you what your contract involves." How long were you involved with the franchisers?

What I would get from this post, is to be as careful in evaluating your exit strategy from a franchise as starting it!! This was probably a valuable post to everyone reading it. imonlyfamous seems to be in the position of having bought and almost selling a franchise that he is uncertain of exactly what he has agreed in writing! SCARY!!

Thanks for all the responses, I appreciated every single one of them.

 

[AJPRATT]

I have to say that I would rather someone offer me their honest thoughts and be "condescending" than to sugar coat it and me be completely oblivious. I appreciate candor. Also, keep in mind that its difficult to convey emotions in posting. I would appreciate anyone taking the time to reach out to me via email to offer their help. Some could see it as spam, I do not. Then again, delete the message if you find it offensive.

And, I respectfully say that some posters here make their living by consulting, it would be vulgar for me to expect them to give me all of the answers or do all the work for me for free. I am thakful that they respond to ANY of my posts. It would be like us handing out free coffee all day just because we have it. Education is expensive. Here's another quote: "If you think an education is expensive, try ignorance." Hire a lawyer to protect your interests or at least go for a consult to get a good, hard look at what you are up against.

I don't think anyone should take unanswered posts personally. Sometimes, people just don't have an answer for you. I have posted plenty and received no reponse. And, I have to admit, as I learn more about this business, I look back and can see that some questions I asked were silly question and don't blame people for not replying.

Remember that the wrong advice for free is far more expensive than the right advice that you've paid for. Very true.