Remember the nightmare scene in "Apocolypse Now" when the captain finds himself in the middle of a pitched battle and asks "Who's in charge here?", and the response was "We thought it was you!" That's been my experience getting my Subway franchise through escrow.

First, it is important to realize that no-one is in charge. Here are all of the parties who can delay or kill the sale: the buyer, the seller, the broker, the franchise Area Developer, the franchisor, the landlord, the landlord's property manager, the buyer's lender, the seller's lender, the state sales tax board, the insurance company, and the escrow officer. And NOBODY IS IN CHARGE!

We were originally scheduled to close October 23. It didn't close then because the Franchisor wouldn't release the transfer until the Buyer held the final closing papers for a minimum of 5 business days (new rule that no-one knew about). Oh, by the way, the franchisor is now insisting that any transfer can only take place on a Wednesday because the fiscal week ends on Tuesday (another new rule that no-one knew about).

It didn't close on October 30, because the lender revealed that the landlord hadn't signed the Estoppel Certificate and Subordination of Personal Property. The landlord said they wouldn't sign because they needed a letter from the Franchisor certifying that the buyer was a qualified Franchisee. The Franchisor said they wouldn't release that verification until close of escrow. Catch-22. Fortunately, I had gotten a copy of the closing papers, probably by accident, which listed the buyer as a qualified franchisee, so I sent it to the landlord, who then signed the documents. By the way, the landlord charged me $1,500 to review the 1-page Estoppel and the 2-page Subordination Agreement. I might have asked the buyer's lender why this subject didn't come up the previous week.

Then, it didn't close on November 6 because the buyer didn't sign all of the lender's documents exactly right, and because the lender is on the other side of the country, FedEx couldn't fix this fast enough. In addition, the lender revealed that they didn't have a complete copy of the lease, and they had asked "everyone" for a copy and still didn't have one. "Everyone" didn't include me, and they had it in 5 minutes after asking, but it was too late. Next date: November 13.

On Friday, November 9, the escrow officer and the lender revealed yet another problem: the address of the franchise location. Some documents said the street address was "423" and other said it was "425". The numbers on the store, and the sales contract, and the property tax bill all say "423". The original lease says "425" and the option extension amendment says "423". In actuality, the store is a street-level space in the "425" building. The lender says they can't draw the final documents and fund the loan until this is cleared up. Yikes! Finally, we settled on "423 in the 425 building" as an acceptable and politically-correct inclusive address.

So now we are scheduled to sign docs on Tuesday, and close on Wednesday. We're keeping our fingers crossed.

What is there to learn? 1) Selling (or buying) a franchise is a very messy business. There are more parties to the franchise transaction than selling an independent business, so it is more complicated. 2) No-one CAN be in charge. As the seller, I tried to be in charge, but the escrow officer and the buyer's lender wouldn't tell me everything I needed to know for fear of breaching confidentiality, which is legitimate. The escrow officer can't be in charge because she has no knowledge of the rules and instructions that the Franchisor makes up and constantly changes. The franchisor doesn't want to be in charge. Once you know all this, it becomes somewhat easier to accept, but it is still frustrating.

And guess what? This escrow is easier than many, because at least the landlord responded with an Estoppel Certificate, and also because NO ASSIGNMENT WAS REQUIRED. That was the good clause in the Subway lease: the franchisee is a sublessee, and Subway can put in any franchisee of their choice. I am hearing lots of stories about landlords ignoring requests to sign assignments, which puts the sale in a huge bind. That's going to be the subject of a separate blog.