People make the informed decision to enter the world of franchising for many reasons, most of which are due to the beneficial nature of the business model itself. Tried and true processes, recognizable brand name and the solid backing of a corporate partner. All combine to make owning a business of your own a reality in the quest to become the boss instead of the employee. But one overlooked factor continues to be the exit strategy question. Because franchises should be thought of as an investment. You buy it, you run it, you succeed and then you’re left with an asset. If and when you do decide to make an ownership exit, what will be your plan to get you to the finish line?
It’s highly advisable to integrate your franchising plans with your retirement goals. How, when and where you decide on an age and a financial figure is completely up to you, but a business of your own can play an immeasurable part in determining your future. A financial advisor, CPA and a personal attorney should all share in the consultation of your plans—making sure you’re on track to create the future you’ve always dreamed of.
What type of exit strategies are common for franchisees? Assuming that you’ll one day have several years of prosperity at the helm of your own franchise, let’s look at the most popular options:
Selling your franchise is typically the highest consideration on the list. After all, once you’ve built a prosperous business, it invariably will be worth more money now than when you originally bought the franchise years ago. If you decide to go this route, plan early and often when it comes to keeping careful business records. A new buyer will want to know how to keep the momentum going. Prior to officially putting the franchise up for sale, arrange a business valuation study of your operation and current market conditions. Next step? Profit!
Succession is another common exit strategy for franchisees. We often hear this reasoning for those wanting to get into franchising in the first place. “I want something I can build up, then pass down to my children,” is a very common refrain. If this is your plan, find ways to integrate your immediate family in the operations of the franchise prior to the succession. You can do your part to provide the on-the-job training necessary to see the business continue to prosper once you’re no longer in charge of day to day operations.
Semi-absentee is another exit strategy. As a franchise owner, if your favored option is to see the business continue—but without your daily input, you could hire a new boss in what we call, “managing the manager.” Many franchise operations are distinctly set up for the semi-absentee model and it’s extraordinarily common. Having a competent manager in place to run a profitable business while you put your focus in other areas—be they business or retirement, is an attractive option as well.
If you’re a budding entrepreneur looking to get into franchising, keep in mind that having an exit strategy can be just as important as having an entry strategy. It’s definitely something you should bring up during one of our no-cost, no obligation visits with a qualified FranNet representative. We can provide you with plenty of examples, whittle down your choices and decide on a long-range plan that suits you best.
Let’s chat! There’s a local FranNet consultant right in your market who knows that market inside and out – knows the personality of the market – knows the competitive landscape. FranNet has a great track record of assisting individuals on their path to entrepreneurship, and one of our franchise experts would love to provide you with guidance free of charge. Sound like something you might be interested in? Get started here and find your local consultant right now!