Documents You Need When Selling a Franchise

documents needed when selling a franchise

If you plan to sell your franchise, that’s a big move! But before you get ahead of yourself, some paperwork is involved—okay, more than a bit. But don’t worry—we’ll walk through it together, so you know what to expect.

 

Selling a franchise is more than just shaking hands and handing over the keys. You’ll need specific documents ready to go—both to protect yourself and to make the sale process as smooth as possible. Let’s break down what you’ll need.

 

1. Franchise Agreement

This is the big one. The franchise agreement outlines the relationship between you and the franchisor. It usually includes rules about selling the franchise, what kind of buyer is acceptable, and what steps you need to follow. Tip: Go through the agreement again before listing your franchise. Some franchisors require written approval or even have the first right to buy it back themselves.

 

2. Franchise Disclosure Document (FDD)

This document gives potential buyers a complete picture of the franchise. It includes financial details, legal background, and the expectations for franchisees. Buyers usually need to receive this document at least 14 days before signing anything. Even though you’re the seller, your franchisor may still need to provide the FDD to the buyer. You’ll want to confirm that process early on.

 

3. Financial Statements

Buyers will want to see how your franchise is doing. This typically means:

  • Profit and loss statements from the past 2–3 years
  • Balance sheets
  • Cash flow statements
  • Year-to-date financials

Make sure your records are clean, current, and easy to understand. A good accountant can be a big help here.

 

4. Lease Agreement or Property Details

If your franchise has a physical location, you must provide details about your lease. Buyers will want to know:

  • When the lease expires
  • If it can be transferred
  • What the monthly rent is
  • Any renewal options

Your landlord may also need to approve the new buyer, so get ahead of that conversation.

 

5. Inventory and Asset List

Give buyers a complete list of everything they’ll get—equipment, furniture, tools, supplies, and even leftover stock. Make the list specific. Include brand names, serial numbers, purchase dates, and conditions where possible. This shows transparency and builds trust.

 

6. Employment Information

If your franchise has staff, the buyer must also know about them. Include:

  • Job titles and responsibilities
  • Salaries or hourly rates
  • Work schedules
  • Employee contracts or agreements

Keeping your team in the loop can make the transition easier once the sale is finalized.

 

7. Franchise Resale Application

Most franchisors require a resale application to be submitted before approving a sale. This form usually asks for the following:

  • Information about you
  • The buyer’s details
  • Timeline for the sale
  • Financial details of the transaction

Your franchisor might also request an interview or buyer screening.

 

8. Purchase Agreement

Once you find a buyer, you’ll need a formal purchase agreement. This outlines:

  • The final sale price
  • What’s included in the sale (assets, inventory, goodwill, etc.)
  • Payment terms
  • Closing conditions
  • Legal obligations

Always have a lawyer review this before signing anything.

 

9. Training and Transition Plan

Franchisors often require that new buyers complete training. You might also need to help during the transition period. Put together a written plan that outlines the following:

  • Training schedules
  • Support during handover
  • Contact info for suppliers and vendors
  • Any unique knowledge or tips you can share

This shows buyers you’re serious about setting them up for success.

 

10. Proof of Franchisor Approval

This is a formal document from the franchisor giving the green light for the sale. No deal can close without it, so make sure you meet all their requirements first.

 

11. Confidentiality Agreement (Optional but Smart)

If you’re speaking with potential buyers, have them sign a non-disclosure agreement (NDA). This protects your business info from leaking to competitors or being used in the wrong way.

 

Getting Help Is Key

Let’s be honest—this is a lot of paperwork. Don’t be afraid to bring in the pros:

  • A franchise consultant can help value your business and market it
  • A franchise lawyer can draft and review contracts
  • An accountant makes sure your financials and taxes are on point
  • You may also need a real estate agent if the property is involved

 

Selling a franchise is a big move, but it doesn’t have to be stressful. Being prepared with the right documents makes all the difference. It speeds things up, helps you avoid legal trouble, and shows buyers you’re ready to make a clean, professional deal.

 

Make a checklist, talk to your franchisor, and bring in support where you need it. If you want to sell your franchise, contact Franchise 360 to discuss your requirements. Contact us today to learn more about how we can assist you.