FRANCHISE BUYBACK AGREEMENT

[// GUIDANCE: This agreement documents the terms of a franchisor's acquisition of a franchisee's business. May be used when franchisor exercises contractual buyback rights, purchases a struggling location, or acquires a franchise for strategic reasons.]

PARTIES

THIS FRANCHISE BUYBACK AGREEMENT (this "Agreement") is made as of [DATE] (the "Effective Date") by and between:

BUYER:
[FRANCHISOR_NAME], a [STATE] [ENTITY_TYPE] ("Buyer" or "Franchisor")

SELLER:
[FRANCHISEE_NAME], a [STATE] [ENTITY_TYPE] ("Seller" or "Franchisee")

GUARANTOR(S):
[GUARANTOR_NAME(S)] (collectively, the "Guarantors")

RECITALS

A. Seller operates a [FRANCHISE_TRADE_NAME] franchise (the "Franchised Business") located at [FRANCHISE_ADDRESS] (the "Location") pursuant to a Franchise Agreement dated [DATE] (the "Franchise Agreement").

B. [SELECT APPLICABLE RECITAL]:

☐ Buyer is exercising its option to purchase the Franchised Business pursuant to Section [SECTION] of the Franchise Agreement.

☐ The Franchise Agreement has been terminated, and Buyer is exercising its post-termination purchase option pursuant to Section [SECTION].

☐ The parties have agreed to Buyer's acquisition of the Franchised Business on mutually acceptable terms.

☐ Other: _________________________________

C. Seller desires to sell, and Buyer desires to purchase, the Franchised Business and certain related assets upon the terms set forth herein.

1. PURCHASE AND SALE

1.1 Sale of Assets

Seller agrees to sell, assign, transfer, convey, and deliver to Buyer, and Buyer agrees to purchase from Seller, all of Seller's right, title, and interest in and to the following assets (collectively, the "Purchased Assets"):

(a) Franchise Agreement: All rights under the Franchise Agreement (which shall terminate upon Closing);

(b) Tangible Assets:
- All furniture, fixtures, and equipment listed on Exhibit A;
- All inventory of saleable products;
- All supplies and materials;
- All signage (interior and exterior);
- All point-of-sale equipment and systems;
- All vehicles used in the business (if any);

(c) Intangible Assets:
- All customer lists and customer data;
- All telephone numbers and fax numbers;
- All domain names, social media accounts, and email addresses associated with the Location;
- All permits and licenses (to the extent transferable);
- All business records and files;
- Goodwill associated with the Franchised Business;

(d) Lease: All rights under the lease for the Location (the "Lease"), subject to landlord consent;

(e) Contracts: All rights under contracts listed on Exhibit B (to the extent assignable); and

(f) Other Assets: [SPECIFY ANY OTHER ASSETS].

1.2 Excluded Assets

The following assets are excluded from this sale (the "Excluded Assets"):

(a) Cash and cash equivalents;
(b) Accounts receivable;
(c) Prepaid expenses (unless prorated);
(d) Personal property of Seller not used in the Franchised Business;
(e) Insurance policies;
(f) Tax refunds and credits;
(g) [SPECIFY ANY OTHER EXCLUDED ASSETS]; and
(h) Any assets not specifically included in Section 1.1.

2. PURCHASE PRICE

2.1 Purchase Price

The total purchase price for the Purchased Assets is $[PURCHASE_PRICE] (the "Purchase Price"), allocated as follows:

2.2 Purchase Price Determination

☐ Option A - Fixed Price: The Purchase Price is a fixed amount agreed upon by the parties.

☐ Option B - Fair Market Value: The Purchase Price is based on fair market value determined by:
☐ Mutual agreement
☐ Independent appraisal (appraiser: _________________)
☐ Formula: _________________________________

☐ Option C - Book Value: The Purchase Price is based on the book value of the Purchased Assets as of the Closing Date.

☐ Option D - Formula: The Purchase Price is calculated as follows:
[SPECIFY FORMULA - e.g., multiple of revenue, EBITDA, etc.]

2.3 Adjustments

The Purchase Price shall be adjusted as follows:

(a) Inventory: Adjusted based on physical inventory count at Closing, valued at [COST / LOWER OF COST OR MARKET];

(b) Prorations: Rent, utilities, prepaid expenses, and similar items shall be prorated as of the Closing Date;

(c) Deposits: Security deposits and utility deposits shall be [CREDITED TO SELLER / TRANSFERRED TO BUYER].

2.4 Payment Terms

The Purchase Price shall be paid as follows:

☐ Full payment at Closing by [WIRE TRANSFER / CERTIFIED CHECK]

☐ Installment payments:
- $________________ at Closing
- $________________ payable over _______ months at _____% interest
- Secured by: _________________________________

☐ Offset against amounts owed by Seller to Buyer: $________________

3. ASSUMED LIABILITIES

3.1 Assumed Liabilities

Buyer assumes the following liabilities (the "Assumed Liabilities"):

(a) All obligations under the Lease arising from and after the Closing Date;

(b) All obligations under assumed contracts arising from and after the Closing Date;

(c) [SPECIFY ANY OTHER ASSUMED LIABILITIES].

3.2 Excluded Liabilities

Buyer does NOT assume and shall have no liability for any obligations or liabilities of Seller other than the Assumed Liabilities, including without limitation:

(a) Any liability arising from Seller's operation of the Franchised Business before the Closing Date;

(b) Any amounts owed to Franchisor under the Franchise Agreement;

(c) Accounts payable;

(d) Tax liabilities;

(e) Employment-related liabilities (wages, benefits, claims);

(f) Product liability claims;

(g) Environmental liabilities;

(h) Litigation and claims; and

(i) Any other liabilities not expressly assumed.

4. CLOSING

4.1 Closing Date

The closing of this transaction (the "Closing") shall occur on [CLOSING_DATE] at [TIME] at [LOCATION], or at such other time and place as the parties may agree.

4.2 Seller's Deliveries

At Closing, Seller shall deliver to Buyer:

(a) Bill of Sale in the form of Exhibit C;
(b) Assignment and Assumption Agreement in the form of Exhibit D;
(c) Assignment of Lease (with landlord consent);
(d) Keys, access codes, passwords, and credentials;
(e) Original licenses and permits;
(f) Customer lists and business records;
(g) Certificates of title for vehicles (if applicable);
(h) Release agreement (Section 8);
(i) Non-competition agreement (Section 9);
(j) UCC termination statements (if applicable);
(k) FIRPTA certificate;
(l) Such other documents as Buyer may reasonably request.

4.3 Buyer's Deliveries

At Closing, Buyer shall deliver to Seller:

(a) The Purchase Price (less any adjustments or offsets);
(b) Assignment and Assumption Agreement;
(c) Such other documents as Seller may reasonably request.

4.4 Possession

Possession of the Purchased Assets shall be delivered to Buyer at Closing.

5. REPRESENTATIONS AND WARRANTIES

5.1 Seller's Representations

Seller represents and warrants to Buyer that:

(a) Authority: Seller has full power and authority to execute and perform this Agreement;

(b) Title: Seller has good and marketable title to the Purchased Assets, free of liens, encumbrances, and claims, except as disclosed in Exhibit E;

(c) Condition: The equipment and fixtures are in good working condition, normal wear and tear excepted;

(d) Compliance: Seller has operated the Franchised Business in compliance with the Franchise Agreement and applicable law;

(e) Litigation: There is no pending or threatened litigation affecting the Purchased Assets or Franchised Business, except as disclosed in Exhibit F;

(f) Liabilities: Seller has no undisclosed liabilities relating to the Franchised Business;

(g) Employees: Seller has complied with all employment laws and has no liability for unpaid wages, benefits, or claims;

(h) Taxes: Seller has paid all taxes relating to the Franchised Business when due;

(i) Lease: The Lease is in full force and effect, and Seller is not in default; and

(j) Financial Information: All financial information provided to Buyer is accurate and complete.

5.2 Buyer's Representations

Buyer represents and warrants to Seller that:

(a) Buyer has full power and authority to execute and perform this Agreement; and

(b) Buyer has funds available to pay the Purchase Price.

5.3 Survival

The representations and warranties shall survive Closing for [SURVIVAL_PERIOD] months.

6. EMPLOYEES

6.1 Termination

Seller shall terminate all employees of the Franchised Business effective as of the Closing Date and shall be responsible for:

(a) All wages, salaries, and benefits accrued through the Closing Date;
(b) Final paychecks;
(c) Accrued vacation and PTO;
(d) COBRA notices and continuation coverage; and
(e) All other employment-related obligations.

6.2 No Obligation to Hire

Buyer has no obligation to hire any of Seller's employees but may offer employment to employees at Buyer's discretion.

6.3 WARN Act

Seller shall comply with the Worker Adjustment and Retraining Notification Act and similar state laws.

7. INDEMNIFICATION

7.1 Seller's Indemnification

Seller and Guarantors, jointly and severally, shall indemnify, defend, and hold harmless Buyer from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from:

(a) Any breach of Seller's representations or warranties;
(b) Any Excluded Liability;
(c) Seller's operation of the Franchised Business before the Closing Date;
(d) Any claim by employees relating to periods before the Closing Date; and
(e) Any breach of this Agreement by Seller.

7.2 Buyer's Indemnification

Buyer shall indemnify, defend, and hold harmless Seller from and against any claims arising from:

(a) Any breach of Buyer's representations or warranties;
(b) Any Assumed Liability; and
(c) Buyer's operation of the business after the Closing Date.

8. RELEASE

8.1 Seller's Release

Effective upon Closing, Seller and Guarantors, for themselves and their heirs, successors, and assigns, hereby release, acquit, and forever discharge Buyer and its affiliates, and their respective officers, directors, shareholders, employees, agents, successors, and assigns, from any and all claims, demands, damages, debts, liabilities, actions, and causes of action of any nature whatsoever, whether known or unknown, suspected or unsuspected, arising out of or relating to:

(a) The Franchise Agreement;
(b) The offer or sale of the franchise;
(c) The operation of the Franchised Business;
(d) Any relationship between Seller and Buyer; and
(e) Any other matter relating to the franchise relationship.

8.2 Waiver of Unknown Claims

Seller and Guarantors expressly waive the provisions of California Civil Code Section 1542 (and similar provisions of other applicable laws).

8.3 State Law Limitation

[// GUIDANCE: Release requirements may be void or limited in certain states. Review applicable state law.]

In states where such release is prohibited or limited by law, this Section 8 shall be deemed modified to comply with applicable law.

9. NON-COMPETITION

9.1 Covenant

For a period of [YEARS] years following the Closing Date, Seller and Guarantors shall not, directly or indirectly:

(a) Own, operate, manage, or have any interest in any business that is competitive with [FRANCHISE_TRADE_NAME] businesses within:
- [MILES] miles of the Location; or
- [MILES] miles of any [FRANCHISE_TRADE_NAME] location;

(b) Solicit any customers of the Franchised Business; or

(c) Recruit any employees of Buyer or its franchisees.

9.2 Enforceability

[// GUIDANCE: Non-compete enforceability varies by state. Review applicable state law.]

10. CONFIDENTIALITY

10.1 Continuing Obligation

Seller and Guarantors shall maintain the confidentiality of all Confidential Information relating to the [FRANCHISE_TRADE_NAME] System indefinitely.

10.2 Return of Materials

At Closing, Seller shall return all Operations Manuals, training materials, and other confidential materials to Buyer.

11. TRANSITION

11.1 Cooperation

Seller shall cooperate with Buyer to ensure a smooth transition, including:

(a) Introducing Buyer to customers, suppliers, and vendors;
(b) Providing information about ongoing matters;
(c) Assisting with employee transitions;
(d) Forwarding mail and communications; and
(e) Such other reasonable assistance as Buyer may request.

11.2 Transition Period

Seller shall provide transition assistance for [DAYS] days following Closing at no additional cost.

12. TERMINATION OF FRANCHISE AGREEMENT

12.1 Mutual Termination

Effective upon Closing, the Franchise Agreement is terminated by mutual agreement of the parties.

12.2 No Further Obligations

Except as provided in this Agreement, neither party shall have any further rights or obligations under the Franchise Agreement.

13. GENERAL PROVISIONS

13.1 Governing Law

This Agreement shall be governed by the laws of the State of [GOVERNING_STATE].

13.2 Entire Agreement

This Agreement, including all exhibits, constitutes the entire agreement between the parties and supersedes all prior negotiations and agreements regarding this transaction.

13.3 Amendment

This Agreement may be amended only in writing signed by all parties.

13.4 Severability

If any provision is held invalid, the remaining provisions shall remain in effect.

13.5 Counterparts

This Agreement may be executed in counterparts.

13.6 Notices

All notices shall be given as provided in the Franchise Agreement.

SIGNATURES

BUYER:

[FRANCHISOR_NAME]

SELLER:

[FRANCHISEE_NAME]

GUARANTOR(S):

EXHIBITS

Exhibit A - Furniture, Fixtures & Equipment Schedule
Exhibit B - Assumed Contracts
Exhibit C - Bill of Sale
Exhibit D - Assignment and Assumption Agreement
Exhibit E - Permitted Liens
Exhibit F - Disclosed Litigation

NOTICE: This template is provided for informational purposes only and does not constitute legal advice. Franchise buyback transactions involve complex legal, financial, and tax considerations. Consult qualified legal, accounting, and tax professionals before entering into any buyback transaction.