You might think it is initially annoying when a franchiser requests or requires that you as a franchisee maintain a succession plan. However, this is a win-win situation. All parties will be able to work together on business contingency plan that can benefit everyone in the event of a sudden departure in a franchise business. Â Â Â Â Â Â Â Â Â
A succession plan can help to clarify long-term goals and a strategy for who is eligible to step in, in the event of an unplanned exit. The succession plan need not be complicated, but its very existence can be extremely helpful in the event that a franchisee needs to exit the business very quickly.
It will look at what will happen if the owner leaves by death or otherwise and assist with the best way to keep the business running after an unplanned exit. The succession plan should also be created as a complementary tool with the estate plan which manages the transfers through sale or other means.
Buy/sell agreements, trusts, wills, family partnership, and life insurance policies may all be included in the evaluation of a business succession plan. These issues also must carefully look at the restrictions that could exist under the current franchise agreement. State law could even invalidate some of the restrictions so it is well-worth sitting down and reviewing the opportunities.
Talk to a business planning lawyer to learn more about your company and next steps to take.
