Selling, Assigning or Transferring

Ownership of an Existing Franchise in NJ

Before transferring, assigning or selling a franchise or interest in a franchise, the franchisee must notify the franchisor in writing.  The notice must include (1) the transferee’s name, address, financial qualification and (2) business experience during the previous five (5) years.

Failure to notify the franchisor before a transfer, assignment or sale permits a franchisor to allege a breach of the franchise agreement and to terminate the franchise.

After notice is given, the franchisor has sixty (60) days to send a written response to the franchisee either approving the transfer or setting forth the reasons for denying the transfer.  If the franchisor does not respond to the notice within sixty (60) days, the law deems the transfer approved by the franchisor.

Again, in NJ a commercially good faith standard exists in the conduct between a franchisor and franchisee and the franchisor must act in good faith when refusing to approve a transfer, or in their treatment of their franchisee.

For more information on buying or selling a NJ franchise, go to www.njbusinesslawattorney.com (click here), and www.njcorporationlawattorney.com (click here).