How To Sell A Franchise Business

As a business broker and franchise sales consultant I am often asked what the general process is to sell a franchise business. It’s a valid and important question because at some point the vast majority of franchise owners will want to sell their business for a variety reasons including retirement, relocation, divorce, owner burn out, etc. Here are some general tips below that all franchisees should keep in mind before putting their franchise business up for sale and will hopefully make the sales process unfold much smoother.

Contact the Franchisor

It’s important to let your franchisor know that you are considering selling for a number of reasons. Most franchisor’s have explicit rules (read your franchise agreement carefully) regarding the transfer of franchise unit to new ownership including buyer qualifications, disclosures, transfer fees, etc. Most franchisor’s can also be very helpful in the consummation of the re sale and may even have a prospective buyer on file who has expressed an interest in your specific location or territory.

Sale Preparation

Before moving forward with a listing it is imperative that franchise owners invest the time to prepare and provide sufficient information for a comprehensive listing package that should include a business summary profile, equipment and asset list, and most importantly current and past financial statements. Most prospective buyers will not move forward with a business purchase unless they and their advisors have been provided adequate financial information to verify the business is a good investment. I would strongly recommend that you consult with your accountant or book keeper to help prepare your business records to help validate and support your asking price.

As far as developing a business profile, most professional Business Brokers are very good at helping business owners at organizing and preparing a professional business profile which can be an instrumental tool in the sales process. A professional and thorough profile can also be invaluable in ultimately saving time for both the Seller and Buyer. You can find a business broker in you area by accessing a business broker directory on the web.


Pricing Your Franchise to Sell

Industry sales statistics indicate that the #1 reason why most small businesses and franchises don't sell is because they are overpriced. It’s very important for business owners/sellers to establish a realistic and credible asking price for their business that can be supported on a number of levels, including financial history and market comparables. You should consult with your franchise company or other franchise owners in your system about recent re sales in the market to give you an idea where the market is.

You may also want to find and consult with a local Business Broker in your area about demand and supportable pricing guidelines for your type of franchise business. It’s also important in most cases to offer terms to the prospective buyer because the majority of small business acquisition deals will not be acceptable for bank or SBA financing.


Confidentiality

Unlike the sale of assets like real estate, maintaining the confidentiality of a small business sale can be very important to the owner/operator for a number of reasons. It’s not unusual for employees, customers, and even vendors to become very concerned (or worse) if they become aware that the business for sale. Competitors may also use the knowledge of the business being on the market to gain potential unwanted and untimely advantages.

The best way to maintain the confidentiality of a sale is to hire a professional business broker or intermediary that has experience in confidentially marketing businesses and franchises for sale. This includes providing services such as screening, qualifying, and requiring prospective buyers to sign a non-disclosure agreement before releasing any confidential information.

Marketing and Advertising Your Franchise For Sale

Franchise owners today have a number of options when deciding how they would like to market and advertise their franchise business for sale. This includes going the “for sale by owner” route which has advantages and disadvantages. The biggest disadvantage being the potential loss of confidentiality and the possible negative effects it may have on the business and its chances of selling. The biggest advantage of a “for sale by owner” transaction is the owner obviously is not responsible for paying a commission to a Business or franchise Broker.

The most common option franchise owners choose when selling a franchise is to hire a professional business or franchise broker to handle the sale. Most brokers are only paid a commission after the sale is completed, so there is usually no up front expenses. They are also familiar with their local market and buyer demands, and can help maintain confidentiality as well as prepare and price a business for sale so that it has a good chance of attracting a qualified buyer.

As far as advertising, most brokers also employ a number of local and national “business for sale” web sites that can give a listing maximum and confidential exposure to prospective buyers. They also commonly work (or co-broke) with other professional brokers in their area that might have a prospective buyer for your business.

Listed below are more articles related to the above article from the "Franchise" article category.

People interested in the above article "How To Sell A Franchise Business" are also interested in the related articles listed below:

Children's Franchise

Children's franchise offers a wide range of advantageous services to children and their parents. Parents are often offered guidelines on caring and educating their children through Children's franchise. Franchises for children sometimes employ very efficient people like qualified nurses to take care of the children properly. There are different kinds of franchises for children that offer fruitful services to the parents for growing up their children in a healthy manner.

Daycare Franchises? Montessori Day Care? Start Up Decisions Tackled

The realization that starting a day care is a pretty enormous task slams into you as you slide your resignation across the desk to your ex boss. Weighty questions must be tackled, decisions must be made e.g. Montessori day care or Steiner, daycare franchises or go it alone and the to do list continues to grow.

Franchising A Retail Clothing Store

There are literally hundreds of options when considering a retail clothing store startup. Franchising may be right for those who have the entrepreneurial bones, but are not necessarily filled with new ideas. Getting a business off the ground takes an enormous amount of time and planning. Instead of reinventing the wheel it may make more sense to purchase a retail clothing store franchise. Whatever you are interested in a franchise exists from shoes to lingerie. This article will examine some pros and cons of this style of business model.

Franchising: Questions You Should Ask A Franchisor

If you’re starting a business, you may have considered purchasing a franchise rather than starting a company from scratch. This is particularly common in certain sectors, and has many solid advantages over starting a business on your own. However, before you commit anything, it’s important that you ask the franchisor the right questions to get to grips with exactly what you’re going to be buying.

7 Characteristics Of Business Models Perfect For Franchising

When rapid business growth is on the menu, you might be considering franchising as a way to sky-rocket infrastructural development and revenue acceleration. For many this is a good choice, however for others it just isn’t going to work. In this article we explore traits that make your business model suitable for franchising, and therefore allow you to put more thought into whether it’s right for your business.

Franchising Your Business and What To Look For In Franchisees

Franchising your business can help you to achieve scale much quicker than you would otherwise be able to. It also means that you won’t have to raise as much debt and equity financing as if your business decided to go it alone. But, even if you’re sure that franchising is right for your business, how can you be sure that the franchisees that you choose are right for your business?

Buying A Business Franchise – The Basics

Before you buy a business franchise, you should make sure you’re ready. From choosing the franchise that’s right for you, to making sure you’re right for the franchise, this article takes you through the steps you’ll need to cover in order to get your franchising dreams off the ground.