Transfer of a franchise


FRANCHISORS restrict transfers of their Franchisees in order to maintain control over the persons who operate them. Such restrictions should apply to the franchise agreement, ownership of Franchisee and the assets of the Franchisee’s business.

Typically the Franchisor reserves the right to approve the transferee and the terms of transfer. The right to approve the terms of transfer is important to insure that the buyer of the Franchisee’s business does not substantially overpay for it, or accept burdensome payment terms, which could jeopardize his ability to operate the business in compliance with the terms of the franchise.

Some franchise agreements merely provide that the Franchisor will not unreasonably withhold approval of a transfer. Others specify in considerable details the criteria for approval relating to the proposed transferee and the terms of the transfer.

It is common for Franchisors to reserve a right of first refusal to buy the Franchisee’s business on the same terms as are offered by a bona fide purchaser. Franchisors exercise this right to acquire franchised businesses as company-owned outlets and, occasionally, in lieu of denying approval of a proposed transfer when the Franchisor is unsure that it has sufficient grounds to disapprove a prospective transferee.

Finding and developing good employees

Some Franchisors do offer some assistance in recruiting employees, at least you find job descriptions in the Operations Manual, however in most cases the Franchisee has to hire his own employees, and Franchisor provides initial training for them.

As a rule, the Franchisor expects you to bring appropriate human resource skills to the business along with your business management skills. If you need a lot of semi-skilled or unskilled employees, a Temporary Employment Agency can be of help providing you with the employees, then you need to hire directly only the key personnel which shall be specially good trained so they can help also in training the people provided by the agency. In the job description section of the Operations Manual shall be listed the knowledge an applicant shall have, together with the interpersonal skills required.

Once you select the employees, a detailed interview is necessary to determine whether the applicant possesses those attributes you are looking for.

Use a mix of close-ended and open-ended questions. A close-ended question can be answered with “yes” or “no” while in a open ended question the applicant have to give the details. Finding the right employees is just the beginning.

Your long-term success will depend on your ability to manage and motivate your staff. The type of work your business offers will also impact how you manage and motivate employees.

In a restaurant or service business most employees will not be in career positions. You may often be the first employment experience for many of your employees.

Having complete, detailed instructions and clear, straightforward rules will be important. The most important part of managing your employees is to remember you are the leader.

The buck stops with you. Just as the coach is a role model for players on the team, you are the role model for how things get done in your business. You set the example for how things get done how the business operates.

(Rudolf Kotik is the founder of RK Franchise Consultancy Inc, which developed more than 300 Filipino Companies into Franchise Systems, with address at G/F Minnesota Mansion, 267 Ermin Garcia Street, Cubao, Quezon City. Tel. 9122946, 9122973, email:; websites:,,,


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