It is common for franchise agreements to contain a clause that requires the franchisee to allow the franchisor to match any offer made when selling a pharmacy. A purchaser needs to be made aware of this requirement (which is usually 28 days to match any offer), prior to making an offer on the business. My experience dictates that if notification occurs after an offer is tabled there is a greater chance of problems occurring.
The Problems: Why is a buyer going to put down an offer on a business if they know it will be shopped around and they have wasted time, effort and money to analyse a business. There are enough pharmacies on the market that have no such restrictions and a buyers resources would be better utilised on these.
Who is the winner: I would suggest NOT the owner of the business who is trying to achieve the best price for their business – the best price tabled will only be matched so there is no upside money wise but there is the real chance that good buyers will divert from looking at your business for sale. The winner is the franchisor – the business is either sold to a ‘friendly’ purchaser, or the deal is potentially scuttled and the status quo is maintained.
My advice is to strike out this clause during negotiations. The franchisor will have the length of the agreement as a deterrent to leave early and if the sale of the business means the termination of the franchise agreement then they will have the associated early exit penalties as compensation. This should surely be enough for a well-run franchise model.
We don’t always consider what happens at the end when we are signing a document for the here and now. I’m always more than happy to discuss implications in respect of any instrument you may be signing which will affect your pharmacy’s ability to sell.
Managing Director, Pharmacy Solutions Australia
0417 721 203
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