How to sell a franchise

We look at when and how to plan your departure

Before you get started on your franchise, it’s worth considering how your tenure will end. Can you see yourself being a franchisee until you retire or circumstances dictate otherwise? What if you need to put your business franchise up for sale? Do you want to plan an exit date from your franchise?

Such considerations can be overlooked when starting up a normal business, but it pays to plan ahead when it comes to franchising. We take a look at how to sell a franchise.

Think carefully about your intentions and discuss them with your franchisor. They can then be prepared if you need to sell the business on.

If you want to move on after a set period of time, it can be hard to decide when that should be. Once you’ve made enough money, you could leave to start up your own business, or maybe you’d like to take up another franchise in a different sector.

How to sell a franchiseWhatever your intentions, set yourself goals and achievable timescales so that when it’s time to move on, you will have an exit strategy in place.

However, Brian Duckett, managing director of franchisor consultants Howarth Franchising, points out that you won’t have the final say on any successor.

“When you put your business franchise up for sale, the buyer has to be approved by the franchisor, with a financial package that is also suitable for the franchisor,” he explains.

“The new franchisee will have to meet the same criteria you did when you took up the franchise, which means the person you’d like to sell to won’t necessarily be successful.

“Franchisors will also look at each potential buyer and assess their financial contributions. If, for example, you value your business at £100,000, the franchisor could approve one buyer and not another because of the amount they have borrowed for the bid.

“Their duty of care will be with the new franchisee, which can seem slightly strange if you’ve enjoyed a good working relationship with your franchisor for a number of years. Their main priority won’t be whether you get a good deal for the franchise or not.”

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