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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”).
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
Risks of “Baseball Arbitration” in Resolving Real Estate Disputes
“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.
Disconnect Between In-House and Outside Counsel
'Disconnect Between In-House and Outside Counsel is a continuation of the discussion of client expectations and the disconnect that often occurs. And although the outside attorneys should be pursuing how inside-counsel actually think, inside counsel should make an effort to impart this information without waiting to be asked.
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.