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Can You Own More Than One Franchise?

  People who buy into franchises often buy more than one so they can have more businesses and make more money. Franchise buyers are often entrepreneurially-minded and want to grow their book of business (meaning their book of franchises). The nice thing about franchising is that all the rules, systems, and recipes (if food related) are handed down to the franchisee. All the franchisee has to do is follow those. Once the franchisee has one in place and that franchise is successful, it's relatively easy to replicate this once the franchisee has the hang of running the business.

Can you own more than one franchise?

Generally, there are no laws that prohibit owning more than one franchise. However, it depends on the franchise agreement. Franchise agreements frequently have restrictions on what other type of business a franchisee can own. Sometimes those restrictions are way too broad or overly restrictive, which could mean that you would be violating the franchise agreement. You would want to negotiate those terms to be in line with your future goals. Other possible terms in the franchise agreement that could affect your ability to open more than one franchise are geographic restrictions. Sometimes franchisors prohibit the franchisee from doing business in certain territories, so you want to make sure those terms are in line with your future goals. Need help with a franchise review? Call today at (630) 517-5529 or fill out our inquiry form so we can contact you. ...

What is Commercial Due Diligence?

What is commercial due diligence?

Commercial due diligence is the process of inspecting the business you are buying. It's similar to buying a house —you do an inspection before purchasing the house. The objective of due diligence is to have a full understanding of the target company’s liabilities and strengths, in order to be aware of the potential risks and calculate the Return on Investment of the business purchase. It is important not to view due diligence as a mere formality. Conducting due diligence is the step in the buying process that is going to help you determine whether it’s a good investment to continue with the business acquisition.

Why is conducting M&A due diligence important?

Avoid risks when buying a business

When you conduct commercial due diligence, you reduce the risks of making a mistake when making an acquisition. You make an in-depth investigation to ensure the company you are purchasing is worth its price and that it is free of debts or other liabilities.

Keep the court in your favor

If you make an acquisition and the seller gives fake information about the business you’re buying, in order to enforce your rights, you have to go to court. Unfortunately, a court will not take your claims seriously if you did not conduct commercial due diligence before making the purchase. It is very likely the judge will not act in your favor because it is the buyer’s responsibility to do due diligence in any Mergers and Acquisitions transaction. ...

The M&A Process

Congratulations, you signed a letter of intent (LOI) to buy a business, but now you don't know what to do next. Or maybe you're about to sign an LOI, but want to go with eyes wide open and know the next steps. So what are the steps of the M&A process? The process of buying a business is simple, but not easy. The Mergers and Acquisitions process can be broken down into 5 main steps:
  • Initial discussions
  • Letter of Intent
  • Due diligence
  • Business valuation
  • Purchase agreement and closing
    merger-and-acquisition-process-flow-chart
    These are the five phases of the acquisition process

Initial discussions

The first step of purchasing a business is when buyers and sellers in a purchase sale have informal discussions about whether it makes sense for the buyer to buy the seller's business. At the very least, the seller should have the buyer sign a non-disclosure agreement (NDA) since the seller is probably handing over some sensitive financial and market information. The seller may provide tax returns, profit and loss reports, and daily or weekly sales reports. The parties also often discuss price, deal breakers, and a general timeline for the sale. In order ...
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