Study: Resale Value of Franchises Tops Non-Franchise Businesses

One of the key benefits of getting into franchise ownership is the asset you own. We’ve said it before, a business you own is a business you can one day sell. Many entrepreneurs take advantage of this aspect, even planning for a sale down the road once the business has become a profitable enterprise. Now, thanks to a new study, we find that the resale price of franchises is actually higher than non-franchised businesses.

The study was conducted by the Rinker School of Business at Palm Beach Atlantic University, a peer-reviewed effort undertaken by two doctorate-level faculty members, one of which serves as the director of Palm Beach Atlantic’s Titus Center for Franchising.

The study’s method was fairly straightforward. The authors, along with their research team, examined over 2,500 business resales for over a decade, tracking the purchase prices. They emphasized focusing on the variables that may have a positive impact on the value of a small business resale. What the data they gathered concluded was amazing: franchise resales sold at 1.5 times higher than those of their non-franchise business counterparts.

The key finding reveals what many of us in the franchising industry have been saying for years. A branded franchise adds value to a small business owner.

What are the additional advantages of a franchise resale? Franchise owners, who keep requisite figures to establish a track record of success, can accurately forecast revenue for potential buyers. A franchise for sale should include a built-out and furnished operation. And this extends to your customer base of consumers, your staffing, and your vendor supply chain network. All of which makes an attractive package for potential buyers looking to purchase.

Though it’s been a key talking point for FranNet for quite some time now, it’s nice to know that a scientific, peer-reviewed study does back up the claim that branded franchise operations enjoy a higher resale value for the exact reason you suspect. A proven business model that any new owner can replicate on their way to success as a small business owner.

The complete study, “Determinants Impacting Resale Premium Disparity When Selling a Small Business: A Predictive Non-Linear Approach”, is scheduled to be published in the fall issue of the Journal of Business and Economic Studies. You can track this article by bookmarking the site and checking back.

If the potential resale of a franchise branded operation has become yet another convincing point to investigate franchise ownership, maybe it’s time to begin your entrepreneurial journey. We can help you get started today by setting up a no-cost, no-obligation appointment with a qualified FranNet representative who both lives and works in your area. Together, we can find a franchise ownership opportunity that matches up perfectly with your lifestyle and income-oriented goals.  

Sep 16, 2021