As a franchise business owner (franchisee) ready to sell your existing business, it can be a daunting experience. We have you covered in simple steps to help you ease the process mapping.
Sell your Existing Franchise Business
Selling an existing franchise business is more successful than selling an independent business because most buyers place a premium on the support provided by franchisors. In comparison to franchises, most independent businesses lack the infrastructure and systems that attract buyers. While knowing that you can sell your franchise for top dollar is encouraging, where do you begin? Three straightforward strategies for successfully selling your operating franchise:
Step 1: Prepare Your Franchise for Sale
To begin, contact your franchisor. There is no reason to conceal the sale from your franchisor. Please inquire whether they can assist you with a resale or transfer. Please inquire as to the extent of their assistance. The procedure varies significantly between franchises.
Certain franchisors can assist you with various aspects of the sale. On the other hand, others desire no involvement in the resale except to approve the new franchisee.
Additionally, preparation entails the following:
- Obtaining a valuation.
- Adjusting or normalizing your financial statements.
- Preparing a marketing package — often called a business summary or an offering memorandum — for your business.
Step 2: Market Your Franchise for Sale
Most franchise brokers market their businesses for sale through online portals and their proprietary databases. If your franchisor does not aggressively market your business for sale, a business broker can. Marketing your business for sale varies by franchise, making resales more complicated than selling an independent business.
Step 3 – Negotiate and Close the Deal
Once you’ve identified a buyer to sell in your existing franchise business and the franchise model, you can negotiate a price and initiate the closing process. There are distinctions between selling an independent business and selling a franchise. The buyer must receive a copy of the FDD 14 days before being awarded the franchise. Additionally, franchisors may require prospective buyers to attend a Discovery Day before purchasing a franchise or offering. The franchisee selection process varies according to the franchisor’s preferences and practices.
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