Are you considering selling your franchise business, but are unsure where to start?
Don’t worry: you’re not the first and certainly won’t be the last to be in this position.
The franchise resale process can be a complex and daunting task, but with the right approach and knowledge, you can navigate it successfully.
Wherever you are in your franchise resale journey – whether you’re just starting out, or feel stuck and are looking for some friendly assistance – the Franchise Business Brokers advice hub has got you covered.
In this article, we’re sharing our 10 top and actionable tips you should keep in mind when the time comes for a planned franchise resale.
1) Define your personal goals
Before embarking on your franchise resale journey, it’s crucial to determine the personal objectives you wish to achieve at the end.
Whether you aim to buy your dream car, pay off the mortgage, or invest in a holiday home, knowing your monetary and lifestyle targets will guide your decision making throughout the process.
Keeping these goals in mind will help you to define the profit level and value multiplier you need to achieve, and the time frame in which to do it.
2) Start the process with the end in mind – and plan your growth accordingly
With the knowledge of what you need to achieve, create a long-term strategy that’s carefully designed to hit these goals, with clearly defined steps to follow.
For example, if you need your business’ yearly profit to hit £100,000 with a x3 value multiplier, create a five-year plan that will work towards this. Do this by working backwards to map out the required growth trajectory, then monitor your actual performance against that to ensure you stay on track.
3) Keep your franchisor in the picture at all times
Your franchisor can be an invaluable resource throughout the franchise resale process, so it’s important you maintain open communication with them.
They may be able to introduce you to potential buyers, offer business planning assistance, and provide guidance on driving business performance to hit your all-important metrics.
4) Ensure your accountant understands your goal
Your accountant plays a vital role in the franchise resale process.
Accountants will often try to minimise your business’ perceived profits in order to provide tax efficiencies, but this can harm your business’ sale value. It’s therefore crucial they are aware of your goals and align their efforts with yours to help you exit the business.
Communicate your objectives clearly to your accountant and they can help you maximise the profitability of your franchise. This will present your business in the best possible light to potential buyers.
5) Use an experienced franchise business broker
Engaging the services of an experienced franchise business broker can make a significant difference in the success of your franchise resale.
You need someone who has been there, done it, sold franchises, and thoroughly understands the process – particularly as selling a franchise is different to selling any other business.
Their expertise and network can help you find qualified buyers, negotiate terms, and navigate potential obstacles.
6) Build out a virtual data room
To streamline the due diligence process and ensure you are able to respond quickly to queries from potential buyers, create a secure online virtual data room. This will house all essential documentation, contracts, accounts, business plans, projections and more.
Having these documents readily available will allow you to promptly provide information to prospective purchasers, in turn saving time and building trust. Examples of where you can create a virtual data room include a secure Dropbox folder, or Google Drive.
7) Understand associated costs
Selling a franchise business incurs various costs that must be considered. Common potential expenses include:
- Legal costs e.g. if you are using a solicitor.
- Broker fees e.g. upfront and success fees.
- Franchisor fees e.g. an exit fee which is based on the percentage of the sale price.
Ensure you are aware of these costs and factor them into your asking price, as this will give you extra room for negotiation.
8) Use British Franchise Association (bfa) accredited suppliers
When engaging professionals, such as lenders for the buyer or solicitors, always opt for those who are accredited by the British Franchise Association (bfa).
Accredited suppliers have a deep understanding of franchising and the specific legal requirements associated with franchise resales. Choosing knowledgeable professionals will help expedite the resale process and prevent any unnecessary delays, costs, and complications.
9) Be prepared
Being prepared may sound obvious, but you would be surprised at how often simple questions about the business can stump owners.
During the resale process, you will be challenged by potential buyers who want to understand all the inner workings and nuts and bolts of your business before making a serious offer.
Anticipate the questions you may face during these meetings, and rehearse your informed and succinct answers. Your dedicated franchise business broker can help you prepare for any potentially difficult questions, giving you advice and guidance in how to handle them in order to give yourself the maximum chance of proceeding to the next step.
Appearing prepared will exude confidence and professionalism to prospective buyers.
10) Enjoy the process
Selling your franchise business is a significant milestone and the ultimate pay-off for your hard work and dedication. And at the end of the process, you will be achieving potentially life-changing goals and ambitions that have been years in the making.
So embrace the journey and enjoy the ride! Even if there are bumps along the road, stay motivated and stick with the process – because the outcome truly is worth it.
We hope these tips have proven valuable, wherever you may be in your franchise resale process.
If you are considering selling your franchise and need expert advice or a professional valuation service, please don’t hesitate to contact us. The Franchise Business Brokers team comprise the UK’s most experienced experts across all aspects of franchise resales and work tirelessly to help you achieve your objectives.
We look forward to hearing from you!
