Negotiation of New Agreements with Master Franchisees


When a client acquired a franchise system that had master franchisees with rights that essentially blocked the franchisor from selling products and services directly to its retail franchisees, the client turned to Larkin Hoffman. The Larkin Hoffman franchise team, led by Ed Driscoll and Chuck Modell, helped the client develop a strategy to address the issue. Following the plan that was adopted, the franchise team negotiated purchase agreements with master franchisees representing nearly 50 percent of the revenues of the franchise system at an aggregate price 10 percent below the client’s budget. All transactions were closed simultaneously at Larkin Hoffman offices. The franchise team then negotiated new master agreements with the remaining master franchisees under which the franchisor would regain the rights to sell goods and services directly to its retail franchisees in exchange for a guaranteed purchase formula if the master franchisees later decided to sell their businesses.