Handing Over the Keys: Selling your Franchise

Selling a franchise starts with seeing the end at the beginning. Preparing for a franchise sale must be considered a potential option given the right set of circumstances such as pursuing a new venture, change in business direction, health problems, divorce or retirement.

Regardless of your reason, selling a franchise starts from the beginning of business growth and prepares with the end in mind. How fast and the amount of income a franchise could generate attracts buyers. Sellers should structure their business operations to maximize profits and minimize any burden incurred by taxes.

A business becomes attractive when sellers develop a business environment that promotes continuity and sustainability after the seller is no longer involved in daily operations. Prospective buyers will consider this strategy a plus in potentially higher asset values.

Prospective business buyers will evaluate the demand for the business products or services, any business model complexities, industry trends, and staffing requirements. Buyers also have decided in advance how much they’d like to pay for a franchise business. A realistic expectation of the business and value is important to negotiations.

When selling a franchise, owners have the upper hand. Because franchises are audited by the franchisor, uncertainties are reduced concerning revenues and expenses. Franchises afford the opportunity to research and validate the franchise’s financial model as well as consult with other franchises within the franchise corporation.

When selling a franchise, the owners must consider whether appropriate staffing is in place when the franchise is sold. Can the franchise’s accounting books undergo intense review? Sellers must consider how transfer fees and commissions will impact the business sale price.

Prospective sellers must start the business exit plan years before a sale in order to maximize the value of the business. To learn more about selling a franchise read the Huffington Post article Graceful Exit: Selling Your Franchise or Business.

The challenges owners face when selling a franchise include an approval process implemented by the franchiser, which must approve the transfer process. Franchises often require large franchise fees that pay for mandatory training for new owners. The rules, restrictions, and fees associated with a franchise sale often reduces the pool of potential buyers as most are not interested in following the business structure.

When selling a franchise your major competitor may be the franchisor. In addition to price, the location of a franchise is key to selling the business. When multiple franchises are located in one area the sale price may be pressured or negotiated downward to sell at a reduced price.

To learn more about an exit strategy for selling a franchise read the INC magazine article Can You Sell a Franchise?

Selling a business franchise can be a streamlined process with wisdom,knowledge and skillful understanding.