VIC Should I Buy the Franchise Business?

Vinodsingh · 17 January 2017

Hi,

I am interested in buying a franchise in Melbourne, but the problem is, there is only an 18 months lease agreement left with the shopping centre. The franchise agreement is for another 6 or 8 years.

My problem is, should I go ahead with the purchase of the franchise business or not? I am not sure the lease agreement will be renewed or not as there is no option in the agreement. The franchisor is going to be the main tenant and my position is as a sub-tenant?

Kindly help me on what I should do. Do I purchase the franchise and hope that the lease agreement would be renewed by the shopping centre?

I will be very thankful to you.

Thanks

Regards

Rod · 17 January 2017

Go see a property/business lawyer close to where you live.

The situation may be serious enough to say do not buy the franchise, or the franchisor may have the matter in hand and you don't have to worry, as long as their solution is written somewhere.

Until a lawyer looks at the detail you won't know.

Hayder Shkara · 17 January 2017

Hi Vinodsingh,

Vinodsingh said:
The franchisor is going to be the main tenant and my position is as a sub-tenant?

This is a common arrangement for franchises. It will be in the franchisors interest to get the lease renewed.

There normally is a clause in the Franchise Agreement that stipulates as to what will happen if a lease is not renewed. It may result in you having to relocate to another location.

Which shopping centre is it? Generally speaking, shopping centres will renew leases if you haven't given them a reason not to. If you've been a good tenant and been paying rent, it's likely (not guaranteed) that it will be renewed.

Tim W · 18 January 2017

I say this with all courtesy, but does your gut not tell you that this is a poison deal?

Even going only on what you have said here,
with the missing facts missing, and with all the unstated
ifs, buts, and maybes, not allowed for,
if the deal is as you describe it, then you should approach it with extreme caution.

Franchising is full of traps for new players.
The advice of a lawyer who specialises in franchising - in particular, assisting would-be franchisees,
would be money well invested. And if you can't afford that, then you can't afford to be going into a franchise.

Matthew Karakoulakis · 19 January 2017

Vinodsingh said:
Hi,

I am interested in buying a franchise in Melbourne, but the problem is, there is only an 18 months lease agreement left with the shopping centre. The franchise agreement is for another 6 or 8 years.

My problem is, should I go ahead with the purchase of the franchise business or not? I am not sure the lease agreement will be renewed or not as there is no option in the agreement. The franchisor is going to be the main tenant and my position is as a sub-tenant?

Kindly help me on what I should do. Do I purchase the franchise and hope that the lease agreement would be renewed by the shopping centre?

I will be very thankful to you.

Thanks

Regards

Hi Vindosingh,

I agree with Rod, Hayder and Tim. Franchise agreements are agreements that must be thoroughly reviewed and approached with caution. Given the terms regarding the lease, formal legal advice is required for this agreement.

Please feel free to contact me via the link Matthew Karakoulakis, Lawyer, AMK Law - Melbourne, VIC - LawTap - Find a Lawyer & Book Online Instantly to arrange an appointment where we can critically analyse the franchise agreement and you can consider all of the risks.

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VIC Should I Buy the Franchise Business?

Vinodsingh

Member

Rod

Lawyer

Hayder Shkara

Lawyer

Tim W

Lawyer

Matthew Karakoulakis

Well-Known Member

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