Imagine this. You are writing an offer on your franchise resale opportunity with dreams of entrepreneurship defined and accepted by the parties. It is a bustling Subway franchise in a busy shopping center, foot traffic is thicker than rush-hour traffic, and the numbers? They sing like a well-oiled cash register. You shake hands with the seller, visions of footlongs from your sandwich shop in your head when you hear from the franchisor, “Oh, by the way, you’ll need to refresh the buildout before we approve the transfer. That’ll run about sixty grand.” That’s not a typo and it is a real story. Sixty. Thousand. Dollars. And you didn’t budget for it. The seller didn’t disclose it and the purchase price is already negotiated.
Sound familiar? It happens way too often in the wild world of restaurant franchise transfers but for Certified Restaurant Brokers, it’s business as usual, as they determined up front what the costs will be and who will be footing the bill on these and other hidden pitfalls when buying a franchise restaurant resale.
So let’s unpack the five sneaky pitfalls that kill deals (or at least bleed your wallet), and how you can sidestep them.
Pitfall #1: Underestimating Transfer Costs Overall: Term, Renewal, Training
The fees associated with a franchise restaurant transfer are more than just the cost of the business and those need to be accounted for up front. Thinking franchise ownership is as simple as flipping burgers or slinging subs is a short-sighted approach. You also need to account for the following expenses.
Term: How much term is left on the agreement? If you’re buying a franchise with two years remaining, the lender or franchise may require that you go ahead and extend the remaining term of the franchise agreement. That is accompanied by a cost. It can range from just a few thousand to 50% of the then-current franchise fee. Thus, it is material to the transaction and needs to be accounted for. Who will pay it? Is it the seller or is it the buyer? Is it required at the time of sale or can it be kicked down the road for two years? If it’s allowed to be delayed, is there an issue with lending? The term of the franchise must be accounted for in all deals.
Training: The cost of training does not equate to just the transfer fee. Many training programs extend for weeks. Franchisors don't mess around. They mandate weeks, sometimes months, of hands-on immersion. We're talking classroom sessions on everything from food safety protocols to customer service scripts, plus on-site shadowing where you are elbow-deep in operations, learning the secret sauce to that perfect assembly line. Buyers must account for time out of work, before they are earning money from the store, while they undergo anywhere from two weeks to three months of training depending on the brand. A quick tip here. It is often not possible to substitute a friend or family member for training so the person attending is generally required to have an ownership stake in the business.
Travel: Where will the training occur? If it is held at the corporate headquarters, you must plan for travel expenses that include hotel rooms, airfare, and meals. You must also account for the emotional cost of being away from the family along with childcare expenses depending on your personal circumstances. While some terms are negotiable with the seller, it is never anticipated that a seller will cover the travel or room and board for a new buyer to train. In almost all instances, franchises require these to occur before closing.
Transfer Fee: The transfer fee is paid to the franchise and shouldn’t be equated to money going to the seller for the deal. This is the cost for the franchise to provide all the training we just described and it is not cheap.
How to dodge the pitfall: Knowledge is power. A Certified Restaurant Broker will guide you through the potential costs. In addition, they have lenders familiar with restaurant franchise transfers and the need to cover these expenses through operating capital. This is an amount over and above the sales price to launch the business.
Pitfall #2: Ignoring Franchisor Approval Delays
Here’s where deals often flatline. Buyers get excited, sign the purchase agreement, and think they are cruising toward closing. Then they discover franchisor approval is not a rubber stamp. Franchisors are protective parents. They vet buyers like you're applying to Harvard. Credit checks, net worth and proof of funds, and business plans that could double as novels... Franchisors want spotless applications, background checks, financials, and interviews.
Sellers must remember their own process of discovery and understand it is exactly the same for a new buyer. Miss one document, or send it late, and the file gets pushed to the bottom of the pile. Franchisors are often just focused on new sales, rather than transfers so you need to be the squeaky wheel, asking for attention and being scheduled for Discovery Days. The seller has a vested interest, so he also has to be involved in this stage. You don’t want your deal to drag for three, four, even five months, while lending commitments expire, to get through approvals.
It is not just approval but also training. Seller should investigate the training calendar offered on the portal, provide a calendar to their Certified Restaurant Broker and allow time for this process within the deal terms. We’ve seen buyers become frustrated because of unrealistic timelines for closings. Many transfers flatline here, with poor expectations set between the buyer and seller about a reasonable timeline and deals dying not from bad fits but from bureaucratic quicksand or unrealistic closing dates.
How to dodge the pitfall: Restaurant brokers with brand relationships will have insight into the approval process, timeline, and training calendar. Rely on their knowledge and experience and question anyone representing a brand without this experience. Ask for a realistic, not a “fast” closing as third party consents rarely move quickly.
Pitfall #3: Hidden Debt From Prior Owners
Picture this nightmare: you close on your shiny new store, pop the champagne, and within weeks, vendors start calling about unpaid invoices. Or worse, a lien surfaces on the equipment. Turns out, the previous owner owed more than they admitted. Guess whose problem it is now? Yours.
If you think this doesn’t happen, think again. It occurs when buyers and sellers work together on a deal, without a Certified Restaurant Broker and the protections offered by a written agreement and legal representative for the closing.
Surprise liens on the equipment, unpaid vendors, tax liens or even SBA loan balances are legal headaches that tie you up in court instead of counting customers.
Buyers overlook this because financials look tidy on paper and the seller seems like a nice guy. On the other hand, sellers might not even know; or a lien could be satisfied but never removed. Maybe the debt snuck in under a different LLC or got bundled into an old supplier contract. Either way, post-closing, it's on you, the shiny new owner, to exorcise those demons.
How to dodge the pitfall: Never close on a “For Sale By Owner” concept without representation. In only rare circumstances should you do a stock sale. Ideally, you would be represented by a Certified Restaurant Broker and an attorney he or she recommends for the deal who can advise you properly. This is the simplest bullet to dodge as long a lien checks are in place prior to closing and warranties and representations are executed but without them, you are on the hook for whatever you inherited.
Pitfall #4: Lease Assignment Nightmares
Leases and landlords are the villains of restaurant franchise transfers. You may have the cash, the loan, the franchisor’s blessing, but without a landlord’s signature on that lease assignment, you’re dead in the water. You need a 10-year term (or options) to snag SBA financing. Lenders won't touch a transfer without it; it's their security blanket. But here's the pitfall: Landlords who treat assignments like pulling teeth. "New tenant? New terms. And oh, by the way, rent's going up 15%." If they balk, your funding evaporates, and that dream shop sits idle, bleeding holding costs.
This flares up because leases are sacred cows for property owners. They want guarantees, not gambles. A franchise transfer might trigger their "change of control" clause, demanding fresh credit checks, personal guarantees, or even cosmetic upgrades to the space. Buyers zone in on the business, forgetting the building's the backbone.
How to dodge the pitfall: Understand the terms of the assignment and assumption of the lease. A Certified Restaurant Broker will carefully review the lease and understand the requirements early in the transaction. He or she will also know if there is a lease rider, worth it’s weight in gold and often attached to lease for franchise restaurant locations. They will also have a contingency written into the contract that without a transfer of the existing lease, the deal is over.
Sellers have significant skins in this game. They need to know what the landlord is willing to do early. Build rapport over time. Get a tentative nod in writing early, if it’s an approved franchisee. It could be the difference between a seamless handoff and a standoff that scuttles the sale.
Pitfall #5: Unexpected Remodel Fees - the "Shiny New Look"
Last but not least, the remodel monster lurking in the franchisor's playbook. This one hurts the most because it often shows up late in the game. Franchisors push brand consistency, which means remodels every five to seven years. If you’re buying a location due for a refresh, the bill could be anywhere from $50,000 to $100,000 or even more.
Remodeling right when cash flow's is the tightest is diverting funds from marketing or that emergency generator you need. Why does this occur? Franchise image standards evolve. Think about Subway's pivot to "Fresh Forward" designs or brands adding drive throughs or less seating post pandemic. r McDonald's digital kiosk wave. Sellers might be grandfathered in, but buyers? You're on the hook for compliance within 90 days of transfer. Ignore it, and you risk probation or, gulp, termination.
How to dodge the pitfall: Understand the requirements up front. Ask the seller and your Certified Restaurant Broker. Our brokers write the agreement on who is paying what portion into the contract and asking sellers up front if a remodel is requested. Don’t forget that this is all negotiable a well. A franchisor with a failing location may be willing to bypass a requirement to upgrade for the right candidate.
The Bottom Line
Franchise restaurant transfers aren’t just about snagging a great location. They’re about owning smart. Buyers, the trap is thinking you’re only purchasing four walls and a sign. In reality, you’re buying into systems, relationships, and obligations. Some are visible while others are buried deep.
Certified Restaurant Brokers understand and counsel sellers to be an open book and totally transparent in these five factors and others. They know that deals with clear disclosure move faster, reach higher valuations, and attract stronger buyers.
If you’re buying a franchise restaurant resale, it’s simple. Ask early, disclose early, and budget generously.
Franchise transfers can be smooth and profitable when the hidden pitfalls are dragged into the light. Ignore them, and you’ll join the long list of deals that died not from lack of interest, but from lack of preparation.
For the most extension nationwide dateabase of franchise restaurants for sale, visit the We Sell Restaurants website or contact the nearest Certified Restaurant Broker in your area.