Franchise systems present a valuable investment proposition for both strategic and financial purchasers. Entrepreneurs seeking out their next business venture, manufacturers in need of a distribution network for their products or services, and competitors looking to take advantage of synergies, economies of scale, expanded offerings, or growing market share – in each case – can achieve those investment goals through the acquisition of a franchise system. Private equity firms are attracted by the robust, diversified, and continuous royalty streams; the proven (often internationally) business model; the potential for organic and rapid growth (without significant capital investment); and the goodwill and strength of an established brand that franchise systems can provide.
This article was first published in the Fall 2016 edition of the Franchise Law Journal (Volume 36 – Number 2) by the American Bar Association Forum on Franchising. Read the full article Negotiating Critical Representations and Warranties in Franchise Mergers and Acquisitions – Part II.
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