Franchise Owner-Seller Transition Timeline

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March 21, 2023

by a searcher from University of Notre Dame in Houston, TX, USA

Does anyone know how long the typical franchise specific owner-seller transition training period lasts post-closing / # hours? And is it customary that the seller's time during that period is included in the purchase price, or is it on the buyer to compensate the seller for all of their time post-close?

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Reply by a professional
from Villanova University in West Chester, PA, USA
Hi ^redacted‌! Typically sellers are compensated post closing for transitionary services, including training. Of course, everything is negotiable, so you could structure it to be included in the purchase price. Most often, it is structured in one of the following ways (i) employment agreement for part time or full time employment of the Seller for a specific period of time, (ii) consulting agreement for transition support, or (iii) transition services agreement. I'd be happy to discuss this further. I've negotiated many of these in all different forms.

With respect to timeline - it depends on the purchaser and their experience, the amount of other employees who are trained that will be staying on and can help with the transition, the availability of training to be provided by the franchisor, interest of the seller to remain involved in the transition, and budget of the acquirer to retain them. If there's a lot to transition, it's typically at least three months and ends around 6 months to one year post closing. If there's less to transition, it may be###-###-#### days.
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Reply by a searcher
from Indian School of Business in Raleigh, NC, USA
Agree with the above comments. Often the basic training will be provided by the franchisor not the seller. One advantage of buying a franchise business is the support from franchisor and by the network of other franchisees, which reduces your dependence on the seller. Another strange fact - often the franchisor has right of first refusal to purchase and may in fact have to "approve" you as a buyer before you can transact. Its always best to get in their system and sign the FDD to learn more and avoid delays later.
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