There are many reasons as to why you have decided to sell your franchise, from a retirement to wanting to invest in another business opportunity. Selling and buying an existing franchise is also known as a ‘re-sale’. You have to prepare for your re-sale from the very beginning of your franchise career if it is possible. These simple steps will help you get organised and prepared for the re-sale.
Have an exit strategy
You should be prepared and have an exit strategy from the start of your franchise career. Your franchisor will also have terms and clauses in the agreement, which would have been signed at the beginning of your working relationship. An exit strategy can have different reasons such as retirement or you want to travel. However, the key is in the planning and being prepared for your exit.
Have your records in order
Having your records and affairs in order is one of the reasons why you need to make sure that you are planning your re-sale well in advance. The recent couple of years of your business records should be well presented according to industry guidelines. Some of the records that any prospective buyers may want to see are: budgets, business accounts, profits, any losses, employment records.
Be aware of the market
If you have decided that you definitely want to sell your franchise and are not in a rush, sell when the business is at its peak. The goal of the re-sale is to get the best selling price, therefore you want to sell when the market conditions are advantageous to you.
Get your franchisor involved
You need to make it clear to your franchisor what your plans are. Maintain your relationship with them throughout and at the end as well, this will only help you gain the biggest sum for your re-sale. Also the franchisor will likely help in selling your franchise. You should be aware that choosing the buyer for your franchise is ultimately the franchisors decision, as they will be the ones carrying on the relationship with the buyer.
Inform your staff
When you feel like the time is right and you are fully ready to sell, inform your staff. The decision you will make will affect the staff in terms of having new management, so it is only fair that they are made aware of the changes. The best way to break the news is a group meeting, rather than an email or any leaked news.
Get the value of the business
You need to get your business valued. This will take due diligence on your behalf and you are likely going to have to seek professional help. There are several different elements which will help you decide the value of your business. For example how many people are interested in your business may play a part in the value of it. The financial position of the business, current, recent and projected profits, cash flow, business growth potential and how well you have controlled your business costs are also likely to play a part in the value of it.
Present the information to potential buyers
You may need to get prospective buyers to sign a confidentiality agreement if you are showing them information which you deem confidential. However, prospective buyers will request to see your business records to see the state of the business that you are selling to them.
Consider professional help
This will take some pressure off you and really give you the help you need, unless you are experienced in selling a business. Consider paying the fees that you will need to seek professional help because during this particular process you will need all the help and advice you can get.
The key is to be organised, prepared and have a well-planned exit strategy as this will enable you to have a much smoother selling experience.