10 questions to ask a business broker before you engage their services
Everyone needs to exit their franchise business at some point and the reasons why can be wide and varied. So too can the outcomes.
Most sellers want a quick sale at a great price. In most instances, your best chance of achieving this is by using a business broker – who will save you time and hopefully make you money. The other alternative is to market and sell your franchise business on your own. While this is certainly doable, it is time consuming and you’ll need a special set of skills and knowledge.
Whatever you decide, the first thing you need to do it check your franchise agreement. You may be required to gain prior approval from your franchisor for the purchaser of the business. It’s important that you keep your franchisor informed about your plans at the very beginning of the process and ensure you comply with any rules that apply to the sale. Your franchisor might also be able to help you in selling your franchise.
Below is a list of the 10 most useful questions to ask a business broker so you get the right information to make an informed decision:
- Tell me about your company and your services, what do you offer?
- Do you have any experience or specialist skills in selling franchise businesses?
- Can you tell me about some of your recent sales and provide references?
- What experience do you have selling this kind of business and in this location?
- How will you market my franchise business – what print media will you use and how, which key websites will my business be listed on and how will you use social media?
- What do you think my franchise business is worth?
- Are you affiliated to any networks, associations or trade groups?
- How many prospective buyers do you have in your database?
- How will you screen, introduce and show potential buyers my business?
- Can I have a copy of your listing contract and fee structure?
Don’t be afraid to shop around. Some business brokers specialise in the purchase and sale of franchises and this could be very valuable. Franchise businesses are popular with first time buyers, so targeting this group would be essential.
Your relationship with your broker is important – you’ll want to work with some you get along with and, most importantly, trust. Ask questions, quantify the value they can add, and determine how successful they are likely to be in finding the best buyer at the best price for your franchise business.
Finally, when it comes to fees, they vary depending on the sale price of the business. The contract should cover the fees, length of time they will be representing you, and how they are going to advertise and market your business. If in doubt, seek independent or legal advice.
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