What if I want to exit the franchise business before the end of the term?

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Miles Agmen-Smith is the Principal at ASCO Agmen-Smith Lawyers. Miles is principal of ASCO Agmen-Smith & Co, a boutique law firm specialising in franchising. He has many years’ experience in providing advice to franchisors and to franchisees both in New Zealand and overseas. He is the current chairman of the Franchise Association of New Zealand Inc. and is regularly called upon to present on franchising and to contribute to articles in New Zealand and overseas.

What if I want to exit the franchise business before the end of the term?

Most franchise agreements are for a set term and only allow you to exit the franchise business before the end of the term by selling your interest in the business to another person. You will therefore be required to find someone who is interested in purchasing the business.

The agreement will usually require you to offer the business to the franchisor first before offering it to any third party. If the franchisor declines this offer you will need their approval before selling the business to another person.

Some agreements allow franchisees to terminate the agreement on notice to the franchisor but this is very rare.

The only other way to terminate the agreement is with the agreement of the franchisor.

You should not cease the business without complying with the terms of the agreement as this will put you in breach meaning that the franchisor can probably terminate the agreement and ask you to indemnify it for costs.

If you want to terminate the agreement because you believe the franchisor has breached the agreement you need to consult an experienced franchise lawyer before taking any action.

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