Maximizing Post-Liquidity – Tips on Selling Your Franchise

Sep 18, 2018 | General

Today’s FranNet blog is going to take us on a journey way into the future. Well past the point of your decision to make a personal entrepreneurial journey. Past all the benefits of becoming your own boss. Past what we hope is prosperity and profitability. And to the current point where you’re looking at exercising your exit plan strategy. We’ve spoken in this space before about having a business plan in place which addresses the all-important question. Now, the time has come to cash out and get busy living. Here are some first-rate tips for selling your franchise…and maximizing your post-liquidity earnings.

It’s quite common for the franchise brand to include instructions about this stage of your business ownership as a franchisee. There may be specific terms and clauses which must be met before a sale process can commence. Always check first with your franchisor contacts to help guide you through the process. After all, this again is one of the advantages when you decide to franchise. In a perfect world, you’ll be exiting at the right time according to your plan—in conjunction with positive market forces and a healthy economic climate.  

If you’re worked your exit strategy properly, you’ve probably reached the point where your business goals have been actualized and you’re in the target market for the salability of your operation. Keep in mind that buyers are going to want to delve into a level of due diligence you should be well prepared for. You’ll need to be very organized on your end with prepared reports and documents which belie your current status as a viable operation. This typically includes three years’ worth of past, current and projected profit levels as well as cash flow. Be prepared to discuss your vendor costs and relationships as well. If possible, prepare a business projection report based on your past ownership and the potential future prospects of running the business at its current location. All this information will be key in helping a buyer make a determination.

One key question is whether or not to utilize a business broker. If you do, you can expect about 10 percent of the sales price to go to them. What you get in return may be peace of mind. Confidentiality in the process, through the signing of non-disclosure agreements with pre-screened potential buyers is also a plus. Once the process begins and a buyer becomes interested, then you can enter the process for more detailed negotiations on a sale price and transition plan.

Attorneys and contracts will evolve, once a sale possibility reaches the offer stage. You can expect negotiations to take place at this stage, even on very minute details of your franchise operation—so long as they’re in compliance with the franchise agreement, you’ll be on solid ground.

Understand that selling a business is akin to selling a house. You’ve invested quite a bit of time, money and sweat equity into building it up. Saying goodbye may not come easily. But do your best to take the emotion out of the process. An exit strategy is an important part of the franchise business life cycle. It’s designed to pay off for those who invest in franchising’s power. As always, FranNet can help guide you through this process—even in our initial consultation. Remember that visiting with our qualified representatives is always a no-cost, no-obligation session. If you’d like to find out what the future holds in store for you as a franchise owner, we can help plot out a strategy.

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!