Many entrepreneurs are interested in purchasing a franchise in order to take advantage of known and familiar brand names that allow the purchaser to buy into an established customer base. Franchises also have established systems, policies and procedures. When this kind of purchase occurs, it’s the responsibility of the franchisor to get everything together that’s needed for the purchaser to get started.
As with selling any business, there are challenges that come with selling a franchise. Finding the right buyer can be difficult as a franchise narrows the pool of interested buyers. As some people looking to purchase a business might shy away from a franchise because of the rules and restrictions placed by the franchise owner. If they are looking for a franchise, they may be looking for a specific brand.
When reselling your franchise business, it’s important to consider 5 main areas. You’ll need to first review the franchise agreement and stay in contact with your franchisor. Then, you’ll get your business ready to sell and market it. And then, of course, deal with post-sale issues as they arise.
Review the Franchise Agreement
To get started, you’ll want to review the franchise agreement. You’ll look for those restrictions and rules the franchisor’s included, which may involve the franchisor approving the final sale. This is usually done in order to relieve the new owner of a burdened debt that might put the franchise itself in financial instability. The agreement usually requires the franchisee to meet certain criteria to qualify, which often includes a specific level of business experience and financial backing. There may be a transfer fee required to be paid as the franchise is sold and the agreement could also have a right of first refusal, meaning that if the franchisee receives a purchase offer then they have the right to buy back the business at that offer. So, depending on the agreement, there are several criteria to consider when looking to resell.
Stay in Contact with the Franchisor
You’ll also want to be sure to stay in consistent contact with the franchisor. This is important because you’ll always want to have a sense of the intent to sell and an idea of potential buyers.
Get the Business Ready to Sell
After the initial steps are covered, it’s time to get ready to sell. You’ll need to establish an asking price. Start by researching similar franchises and see what those asking prices are and if they’re comparable to your own franchise and its value. It’s also important to gather historical information about your business, including the customer base and the prominent reasons why your business is a profitable and valuable franchise.
Market the Business
Once the research is complete, you need to market your business! Start searching for the right kind of buyer for your franchise. When meeting with potential buyers, you should develop a solid sales pitch that highlights the value of the franchise and gets them excited about the prospect of buying and running the franchise in the future. You could begin marketing the franchise on your own or work with a business broker who is familiar with selling franchises like yours.
Even after the sale is complete, issues might arise. The buyer could be concerned about taking over after your tenure. You can ease these anxieties by offering to stay on for a bit while the new ownership gets comfortable. Then, you’re on to your next venture!
If you’re thinking about or already ready to sell your franchise, contact the brokers at Liberty Group of Nevada today! https://www.thelibertygroupofnevada.com/ or (775) 825-3948