Diamonds may well be forever, but franchises usually aren’t. However successful you are, however great the rewards, there will come a time when you want to move on. But how do you do that?
Whether you’re retiring, moving or simply fancy a change, selling your franchise isn’t as easy as sticking a card in a newsagent’s window or listing it on eBay.
Firstly, you can only sell it if the franchisor gives your buyer the green light. And just as they were very picky when they decided to entrust their brand to you, rightly, they’ll be every bit as choosy about whoever you hope to sell it to.
Money’s important, but it isn’t everything in franchising.
Franchisors regularly turn away people who may be awash with cash but don’t have the qualities they seek in a franchisee, so they won’t let you sell your franchise to any old Tom, Dick or Harriet. That limits your market, of course, but the franchisor’s caution is what helped make the brand successful in the first place.
The franchisors will be a party to the sale, with a vested interest, so it will typically be a three-way affair involving you, them, and the prospective purchaser.
Secondly, how much is your franchise worth? Is it worth what you say it is, just because you say so, or is it worth what the prospective purchaser says it is, just because they’d prefer to pay you less?
You don’t want to get a penny less than it’s worth and they don’t want to pay a penny more than it’s worth, either, so how do you reach a fair and realistic figure?
Perhaps think of it like selling another asset, your house. How would you value your house? Most likely, you’d seek a valuation from a professional, trusted estate agent, a market expert.
How therefore, should you value your business? The answer is to consult an expert – ideally someone with vast experience of valuing franchises, not a bank manager or accountant with rather more enthusiasm than expertise.
Thirdly, how are you going to market it? Think back to how you were attracted to the franchise in the first place, and all the apprehensions you had. Your prospective buyer may well be feeling the same, so you will have to allay his or her fears, prove how well the business has been doing, and give a convincing reason for wanting to sell up.
There may be awkward questions, and the likelihood of a sale will depend on how honestly and transparently you answer them. If your buyers want to grow the business and you assure them it really does have great potential for growth, don’t be surprised if the buyers ask why you didn’t explore that potential yourself.
Whatever their actual date of birth, they weren’t born yesterday, so the more authentic, realistic and up-front you are about the business and your experience of it – ups and downs included – the more likely they are to want it for themselves.
They’ll probably want a brochure, too – not a general one about the brand, but about your territory, your business baby, the one they’ll be investing their time and money and effort into growing for years to come. You may be brilliant at that – some people are – but don’t just go to a printer and ask them to come up with something.
The words you use need to be enticing and convincing, and the images attractive, taken by a real photographer rather than someone well-meaning with a smartphone. Have you sold lots of franchises before? Do you know the ropes? Did you get the best price every time, or did you rue the day you did the deal?
If you don’t have that experience, then you might wish to draw on the expertise of people who do – in which case, we at Chantry Group might well be able to help you.
We know the franchise world inside-out, most of us are Qualified Franchise Professionals, and our in-house team includes Chris Roberts, a legend in his own career who knows more about the professional valuation of franchises than almost anyone else alive.
We spend all our time helping franchisors attract franchisees, and we support both with their marketing, so we’re in the perfect position to know what each party in a potential sale wants and needs to know.
Our experts will make your brochure sing while at the same time playing Devil’s advocate so you can work out your answers to any awkward questions before anybody asks them. And we can hold your hand, metaphorically, all the way through the process if you want us to. If you’d like to know more about how we can help you, get in touch here.
