A business owner approached SLB Legal after signing a heads of agreement for the sale of their franchise business.

The seller wanted to move quickly and needed a Contract of Sale prepared urgently so the transaction could progress without unnecessary delays or legal complexity.

The challenge was that this was not just a standard small business sale. As a franchise sale, the transaction also needed to work within the franchise agreement, the franchisor's transfer and consent process, and the requirements of the Franchising Code of Conduct.

A practical and commercial approach to the Contract of Sale

We started by taking the time to understand exactly how the business operated, the structure of the franchise sale, the agreed commercial terms, and the key risks that actually mattered to our client and for this transaction.

We also considered the requirements of the existing franchise arrangements and the practical steps required to progress the transfer process, including the interaction between the Contract of Sale, the franchisor approval process, and the broader transaction timeline.

Rather than relying on an overly complex precedent or including every possible clause and warranty, we focused on preparing a tailored Contract of Sale that was appropriate for the specific deal.

This included:

• drafting a clear and commercially balanced Contract of Sale;
• ensuring the transaction documents aligned with the franchise transfer process and the parties' agreed commercial terms;
• removing unnecessary provisions that were unlikely to add value or protection in the circumstances; and
• ensuring key protections and risk allocation provisions remained in place. 

During negotiations, the transaction began to stall because the Purchaser was taking significant time to draft formal responses and proposed changes to the Contract.

Instead of allowing the process to drag on unnecessarily, we proactively contacted the other side and proposed “off-paper” discussions between the lawyers and the parties to work through the outstanding issues more efficiently.

After multiple phone calls and lawyer-facilitated commercial discussions, the parties reached in principle agreement on the remaining points within days. Once the parties were aligned and in principle agreement was reached, the final drafting process was completed through a single round of updates rather than prolonged mark-ups and repeated revisions.

Working collaboratively with the other side and their lawyers did not mean giving up important protections or commercial positions. It meant finding a more efficient way to communicate, negotiate and keep the transaction moving.

Efficient negotiations and a signed Contract of Sale

The Seller was able to progress the franchise business sale with both parties signing a Contract of Sale that reflected the actual transaction and avoided unnecessary complexity.

By focusing on efficient communication and practical negotiation strategies, we helped our client reduce delays, minimise unnecessary legal back-and-forth, and keep the transaction progressing toward signing the Contract of Sale and completing the sale.

Franchise sales involve more than simply transferring a business and its assets from one owner to another.

The transaction also needs to align with the franchise agreement, the franchisor's approval requirements, and the Franchising Code of Conduct, while still reflecting the commercial agreement reached by the parties. A well-structured Contract of Sale should protect against genuine risks and help the parties move efficiently toward completion. It doesn't need to create unnecessary obstacles that delay the deal.

If you are selling or buying a business or franchise, contact SLB Legal for practical legal support with your Contract of Sale and transaction negotiations.