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I'm an MBA student working on an assignment to evaluate the feasibility of transitioning from a license-only model to a franchise model.

We're fine doing the business analysis, but we do have some legal concerns about what to do with the existing licensees. Grandfather them, drop them, or convert them?

Does anyone know of any businesses in the U.S. that have made this type of transition? Or of any case studies on the subject? We would like to be able to address the issue in our paper, rather then just note it as a concern.

Thanks

  • It would matter if the licenses were for a fixed term or not. There are many case studies of relict franchisees continuing after the central franchise dies, but a license-only model is so uncommon to start with that no examples of a conversion to a franchise come readily to mind and many "license-only" models would legally count as franchises. – ohwilleke Sep 29 '17 at 10:08
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You can only vary an existing contract in accordance with the terms of the contract (which presumably is silent on this)or with the agreement of both parties and with consideration on both sides i.e. a contract can only be varied by another contract.

So:

  1. You can dump them
  2. You can grandfather them
  3. You can change them with a new contract

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