What do franchise business buyers want?
Kiwis love franchises - for good reason. They are generally a safer option than starting a business from scratch and most franchise systems offer invaluable training and support. You are your own boss but you’re also part of a team. It’s win-win.
But how can you make your franchise stand out from the rest when it comes time to sell? Mostly, potential buyers are looking for cash flow, something they can add value to, and something that has a good upside. This can be very useful in determining how best to package and market your franchise business for sale. It’s all about keeping your buyer’s needs and wants in mind throughout the sales and marketing process.
To get started, here’s what franchise business buyers want:
A great first impression
If you are thinking of selling, now is the time to sharpen up your business premises. Attend to any neglected areas, repaint or redecorate as required. This includes cleaning vehicles, plant and checking any outstanding maintenance work is carried out.
De-cluttering is another great way to create a good first impression. Start by selling or disposing of obsolete assets or stock that are not essential to the running of your franchise.
A tidy organised business
Also, don't forget the internal workings of your franchise – this includes tidying up your customer databases, formalising any verbal agreements or contracts, and detailing any systems and procedures outside of your franchise system to increase the value of intangibles.
Perhaps the most important aspect in attracting quality buyers is having a good set of accounts. Ensure your accounting and bookkeeping are up to date, as buyers may need to satisfy lenders that they can support their living commitments, as well as service any loan from the business' earnings. Most banks like to examine three years’ previous financial history to satisfy their requirement.
A good bottom line
Franchise business buyers usually look first at the bottom line and if it interests them, then they work their way back up through the accounts. Ideally the bottom line needs to look good and reflect a healthy business, or at least reflect the potential for future profit making.
A lifestyle option
Although cash flow and profitability are important to buyers, there are other aspects that will be of interest too. Buyers are often seeking release from a 9-5 job or they may be attracted by the freedom of managing their own destiny. Be sure to consider these aspects of your franchise in your marketing too.
A supportive community
It could be the first time your buyer has owned a business. As well as training there will be concerns around creating new business, compliance, managing staff and the day-to-day running of the franchise. Detail what support, resources and networks there are in place that will help them operate a successful business.
A smooth transition
Training or transition periods can help. Your buyer may have never owned a business before and could be anxious about getting into your industry. Be clear about what the franchisor offers in this respect and, if appropriate, consider plugging any gaps and staying on in some capacity to ease the transition.
Understanding potential franchise business buyers want and need, will help you to market your franchise accordingly. What motivates them? Why do they want to buy a franchise business and how does your business fit with their plans? Your goal is to help them see the potential in your business and how their skills and experience will make it better.
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