Has anyone acquired a business with a franchise network attached?

searcher profile

November 18, 2025

by a searcher from Duke University - The Fuqua School of Business in Boston, MA, USA

I’m under contract for a B2B wholesale company that specializes in custom apparel & home goods. The owner began franchising in 2024, and while it’s grown quickly, it’s still a relatively small portion of the business today (~10% of $6.2M TTM revenue). In an initial legal consult, I learned that acquiring a franchised operation - especially via an asset sale - can get tricky and expensive (e.g., needing to stand up new franchise agreements with all 20 existing franchisees). I’m trying to understand whether it's even worth pursuing at this stage of the company’s lifecycle. Would love to connect with anyone who has acquired, diligenced, or walked away from an early-stage franchise system. Any advice or lessons learned would be hugely appreciated!
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commentor profile
Reply by an investor
in South Riding, VA, USA
Stock sales will preserve the existing agreements and also existing liabilities the company has. Everyone seems to default to asset sales but I think (and this is a very minority opinion in our community) they're fine if you know the risks and there are benefits (keep the bank accounts, system accounts, compliance certs, benefits, employees etc.. all in place, keep the credit score ratings of the acquired biz in place, preserve access to assets that can't be transferred - in the case of e-Com - this hits a few key distribution channels ). I do think you'd need to hire a franchise lawyer to validate the approach and get their counsel on it. I'm familiar with franchising - but not actually acquiring the entire franchise operation.
commentor profile
Reply by a searcher
from Texas Christian University in Fort Worth, TX, USA
Echoing Andy's comment regarding getting a franchisee survey conducted, especially if you are considering a stock sale. Much like an estoppel certificate, it can help you diligence existing turmoil, if any, in the franchise system. Franchising can be fun and rewarding for both Zor and Zee, but it is its own unique animal.
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