Selling your franchise for a great price
How to sell your franchise business and get a great price
There will come a time to sell your franchise business either to move on to your next opportunity or maybe to take a step towards retirement. Whenever that happens and for whatever reason, one thing’s for sure – you will want to get the best price possible.
"The price you will get is determined by what value potential buyers see in your business".
There’s no doubt that the biggest determining factor is the financials, but buyers are not just motivated by numbers. There are other aspects of your franchise business that can add value – and take it away.
Key characteristics that add value:
- strong cash flow
- good financial history
- brand and business reputation
- franchisor support
- franchisor’s strategic plan and projections
- growth industry
- competitive advantage
- room for growth
- good plant/location/systems
- good staff.
Characteristics that can lower value:
- distressed business
- poor industry outlook
- price cutting
- weak financials
- small customer base
- lack of franchisor support
- key relationships held with owner
- poor records/systems/plant.
When a prospective buyer is appraising a franchise business, they will weigh up all these factors. Planning your exit well in advance and attending to the negative characteristics long before you put your franchise business for sale on the market will help to ensure potential buyers view your business favourably and you get your best possible price. I would also be prudent to check-in with the franchisor as they may have conditions attached to the sale of your franchise, or know of some buyers that have expressed an interest in buying into this franchise.
Other things you can do include being clear about why you are selling, ensuring your business is well organised and tidy – inside (your systems, processes and record keeping) and out (the physical premises, products and assets) – and being prepared. Have all the documentation at the ready and eliminate any surprises that could throw potential buyers off.
Sure, numbers are important, but they are not the only things that matter. Value can be attributed in many ways and can also be in the eye of the beholder, so do your research and get to know who is likely to buy your franchise. Then think about what would be valuable to them.
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