At Franchise Liquidation, we specialise in guiding franchisees through the complex process of liquidation and company closure of their franchised businesses. Whether you’re facing insolvency, contract termination, or operational challenges, our expert team provides tailored liquidation services and corporate insolvency advice to ensure a smooth and compliant franchise exit strategy.

Operating across the UK, we understand the unique intricacies of franchise agreements and work diligently to protect your interests while minimising disruption.

What Is The Process For Liquidating A Franchise Business?

The franchise liquidation process starts with a resolution by the directors to close the business, followed by notifying the franchisor and other stakeholders. A licensed insolvency practitioner is then appointed to manage the company liquidation.

The business’s assets are sold, creditors are paid in legal order of priority, and any remaining funds are returned to shareholders. Final filings are made with Companies House to legally dissolve the company.

How Does Franchise Liquidation Differ From Regular Business Liquidation?

Franchise liquidation includes a franchise agreement, which governs the use of the brand, operational standards, and the franchisor’s role. These agreements often contain specific clauses that must be honoured during the closure process.

Furthermore, the franchisor may retain rights over assets or customer data, and their involvement in the franchise insolvency can affect timelines and strategy. This added contractual layer demands careful legal and operational coordination to ensure compliance.

What Are My Options For Closing A Franchised Business?

Several franchise exit options are available, depending on financial status and franchise agreement terms:

• Creditors’ Voluntary Liquidation (CVL) – Suitable for insolvent franchises, enabling an orderly winding up of the company with creditor claims managed.
• Business sale – A solvent business may be sold or transferred to a new operator, subject to franchisor approval.
• Franchise handback – Some agreements allow the business to be returned to the franchisor under predefined conditions.
• Members’ Voluntary Liquidation (MVL) – A solvent liquidation method to distribute assets tax-efficiently.
• Exit under contract terms – Following specific franchise agreement exit clauses, including notice periods and fees.

How Much Does Franchise Liquidation Cost?

The cost of franchise liquidation in the UK ranges between £4,000 and £6,000 + VAT, depending on the business’s size, complexity, and financial position.

A CVL is common for insolvent franchises, with costs influenced by the number of creditors or legal issues tied to franchise contract termination. Factors such as franchisor-held assets, unpaid fees, and rent arrears may also affect fees. Engaging an insolvency practitioner ensures the most efficient and compliant liquidation process.

Contact Franchise Liquidation to get customised prices for professional liquidation services for your franchise.

What Happens To The Franchise Agreement During Liquidation?

In most cases, franchise liquidation triggers automatic termination of the franchise agreement. Certain post-termination obligations may survive, such as non-compete clauses, confidentiality terms, or liability for unpaid fees.

Depending on the agreement, the franchisor might reclaim branding materials or customer data. A legal review is essential to understand ongoing responsibilities during the corporate liquidation process.

What’s Included In A Franchise Liquidation Service?

A comprehensive franchise liquidation service includes:

• Creditor management – Handling all communication and negotiations with creditors.
• Franchisor liaison – Addressing franchise exit strategy and contractual obligations.
• Asset disposal – Organising the sale or return of business assets, including franchisor-owned items.
• HMRC coordination – Settling final tax matters and ensuring compliance.
• Regulatory filings – Completing all paperwork to legally dissolve the company.
• Tailored approach – Adapting the process to the franchise agreement exit requirements.

Can I Be Personally Liable For Franchise Debts?

In some cases, franchisees can face director liability insolvency if personal guarantees were signed for leases, suppliers, or franchise contracts. These liabilities survive franchise liquidation and may result in personal legal action. Proper advice helps mitigate risks during the insolvency process.

How Does Liquidation Affect The Franchisor And Other Franchisees?

A franchise business liquidation may impact the franchisor’s revenue or brand reputation. Other franchisees may experience increased oversight or changes to network policies. A professionally managed liquidation process maintains brand stability and demonstrates responsible business conduct.

Contact Franchise Liquidation for guidance on franchise debt help, company liquidation, and business rescue options for your franchise.

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