As the owner of an auto dealership, you have undoubtedly spent a significant amount of time and money starting and growing your business. This can be a difficult process, but it comes with a variety of rewards, which may have enticed you to join the auto industry. Once your business is financially stable, however, you may ask yourself the best way to continue to grow and expand. One of the most common ways to do this is through franchise acquisition. Not only does this give you the opportunity to expand your business to new locations, clientele, or products, but it also lowers the risk of doing so. Through franchise acquisition, you are able to join with another company and both reap the benefits of your new relationship.
Franchise acquisition has a significant number of possible benefits, but it is also a complex legal territory. You and another company both undertake a lot of risk if you choose to engage in franchise acquisition. In order to ensure that the benefits outweigh the risks, it is essential to understand your rights and the legal consequences of franchise acquisition before you begin. An auto dealership franchise acquisition lawyer from the Arenson Law Group, PC is prepared to help you through this process, to ensure that your business is protected.
Successful Franchise Acquisition
Franchise acquisition may occur in two different directions: being acquired by a franchise or acquiring a franchise. If your company is being acquired by a franchise, you are likely looking to exit the auto dealership business by selling your company to a franchise. To promote a successful exchange, you will aim to make your business as attractive as possible to potential buyers, as well as look for a buyer that will successfully manage your business. If you are acquiring a franchise, you are likely looking to expand your auto dealership in order to make your business more lucrative. This may be achieved through vertical or horizontal acquisition. In a horizontal acquisition, you acquire franchises in the same industry as your company (i.e. other dealerships); however, in a vertical acquisition, you acquire franchises which assist your company (i.e. distributors, suppliers, etc.). While franchise acquisition may be an appropriate choice for your business, it is only successful if you work with the right franchise. Important information to consider about a potential franchise include:
- Financial forecast for the targeted dealership
- Cash flow forecast
- Goodwill value of the targeted dealership
- Number of competing franchises in the market in a given area
- Currents locations in operation for the targeted dealership
- Projected earnings from the acquisition
- Dealership’s real estate value
It is important to do all you can to determine the success of a franchise acquisition before you commit. This gives you the best chance to choose the right company to work with and reap the benefits of the acquisition.
Contact a Franchise Acquisition Lawyer
Whether you are being acquired or acquiring a franchise, the process can be long and complex. Tensions and emotions can run high when you and a targeted franchise are both working to get what you desire. A franchise acquisition lawyer at the Arenson Law Group, PC can help mediate discussions and decisions between you and another company, as well as assist you in finding a franchise acquisition which will benefit your company. We have significant experience with auto dealership law and are prepared to help protect your rights and your business. To discuss the specifics of your franchise acquisition contact us at (319) 363-8199 today.
Written by James H. Arenson
Last Updated : March 8, 2024