Obtaining a franchise is one of the most profitable and secured business models out there, if ran efficiently. However, sometimes franchise owners seek to move on to a new chapter in their lives and want to sell their franchises. When creating an exit strategy, it is important to envision what you seek to achieve. The primary goal for every franchise owner is to maximize their profits at the end of a sale.
Follow these tips to ensure that you sell your franchise at a maximum value.
1) Assess the Value
Properly assessing the value of your franchise is the first step involved in selling. There are some basic questions worth asking when establishing the price and value of the franchise. How is the market doing? How is the overall franchise doing? How are my sales? Pricing your franchise too low can decrease the value while pricing it too high might limit your buyers. Obtaining an appraisal is the proper route to take to create a price.
2) Involve Your Franchisor
Throughout the entire sale process, you want to make sure that your franchisor is involved. Having transparent communication can ensure a better deal and can help you gain support from your franchisor. You want to share your objectives with your franchisor since they have the final say. A franchisor is a valuable resource when it comes to networking because they can connect you with potential buyers who have an interest in your location.
3) Prepare Your Financial Documents
When preparing to sell, it is necessary to do your financial due diligence. You need to have complete financial statements from your business, including profit and loss statements and balance sheets. Everything should be organized, easily accessible and tidy. This is important in order for you to acquire an understanding of your success as well as to demonstrate your performance to potential buyers.
4) Reach Out to Existing Managers and Employees
In order to avoid broker and finder fees you can start the hunt yourself for potential buyers. Finding a buyer in-house is always more effective due to their acquired experience and knowledge of the brand. By reaching out to managers and employees, you are already targeting a market that is involved with the company. This raises your chances of finding a buyer and allows you to skip out on additional fees and maximize your profits.
5) Optimize Your Business
Being proactive and aware of minor issues within the franchise can really help you sell at a higher rate. Don’t wait until the last minute to fix any troubles, instead stay ahead and aware so that when it comes to selling, you are ready. Often times, franchise owners lose sight of what’s important and focus solely on selling. This is the wrong approach. You must ensure that your business is running smoothly as per usual.
6) Prepare Your Franchise For Sale
Your goal is to make potential buyers fall in love with your business. The advantage of selling a franchise is that customers know what they’re buying, but what makes them want your franchise specifically? The three main points to focus on are : visual aesthetics, operational aspects as well as financial. At first glance you want the buyer to be amazed by the facility itself. Next you want to demonstrate the operational side and how effectively you run your business. Finally, as mentioned before, you will outline managing costs.
Don’t lose sight of what is important, continue to run your franchise as per usual while selling. Most importantly, be prepared and have the confidence to sell. By following these steps, you will create the perfect exit strategy set to maximize your profits during the sale.