Mergers and Acquisitions Involving Franchise Systems: Key Due Diligence Considerations

15 September 2017 Publication

The International Comparative Legal Guide to: Franchise 2018

The number of mergers and acquisitions involving franchise systems has steadily increased in recent decades, but there has been a surge in such M&A transactions in the past few years, largely due to the insatiable appetite of private equity and other investment groups for generally predictable cash flow of franchise systems (compared to company-owned business operations) and the limited capital and hard assets required to run the franchise system (i.e. the primary assets of the franchisor are its franchise agreements).1 However, M&A transactions involving franchise systems present unique issues that must be carefully considered during the due diligence phase and demand a different approach to evaluating the business that the approach customarily taken in M&A transactions involving non-franchise companies. This chapter will discuss certain aspects of due diligence of franchise systems that require deeper analysis.2

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To view the chapter online, click here. The complete ICLG: Franchise 2018 guide can be found here.

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