Plenty of would-be franchisees are so focused on doing whatever it takes to buy a franchise that they fail to factor in when they should actually sell it. While it’s easy to think that one should wait years before giving that any consideration, sometimes it’s beneficial to think of selling a franchise location right from the start.
An exit strategy is vital for any business, but restaurant franchises offer a bit more flexibility and options when it comes to deciding when, and how to bow out. Here’s a few things to consider before even signing on the dotted line.
WHAT DO I WANT TO ACCOMPLISH?
Many franchisees get into the business to profit from one location, or expand their portfolio. Some franchisees may decide to open up several more locations as time goes on, to extend their profit margins and grow the business. Regardless of where you sit, it’s important to ask this question with an exit strategy in mind. What are your long-term goals with your franchise, and how long do you want to remain in the game before it’s time to detach?
There is no right or wrong answer, here. It will also depend on a multitude of factors, including location, family life and other goals. If it’s your intention to reap the rewards of being a franchise owner so you can build up a nest egg and retire in a warm and sunny climate, then you’ll plan accordingly. If your goal is to stay in the franchise game for five years and accumulate enough money to jump ship and start your own business, that’s another.
SHORT VS. LONG-TERM FRANCHISING
The two examples just mentioned represent distinctly different career paths, with their own end goal. There are a myriad of examples in between, but each of them hinge on short vs. long-term planning. Restaurant franchises are extremely resilient when it comes to economic turbulence, which is why they’ve been shown to grow in popularity over the next few years, despite the impact from the Covid-19 pandemic.
Some who never considered buying a franchise location before are now having second thoughts. The question is, will you stay the course, or are you the type of person to make moves quickly, and leap from project to project? Either way, it’s important to try and forecast just how long you want to keep skin in the game.
HOW TO SELL WHEN THE TIME COMES
No matter what you decide, it’s important to know the ins and outs of selling a franchise. Short-term franchises need to be especially careful here, as things may not go according to plan. For instance, if you wish to profit short-term before selling your franchise unit to pay for a child’s college tuition, then timing is everything. Waiting too long to sell could prove difficult, at which point you may overshoot your target exit date.
Thankfully, restaurant franchises have a few built-in mechanisms to deal with this. Franchise owners are especially helpful when it comes to selling a franchise unit, as they usually have buyers lined up to take it over. Consider the benefits of assuming control over an established franchise location, as opposed to cutting ground from scratch. No hard feelings, just good business.
Alternatively, selling later on will give you a lot more flexibility and peace of mind, since there’s no particular deadline to stick to. If sales are sustained for the long haul, then one can enjoy the benefits, while potentially opening up other locations over the course of a decade or two. As the years tick by, you could choose to sell off these franchise locations one by one, or simply stick to a single unit, and sell when the time is right. Again, there is no right or wrong, only what is convenient.
CONSIDER YOUR FAMILY
Finally, it may be advantageous to pass off your franchise location to an interested party within the family. Perhaps your child or relative has been watching you reap the rewards of a franchise location for some time, and wants in. If you’re ready to duck out, it could be an opportunity to sell to them for a lower price (if you desire), and give them a leg up on the success you’ve already established. Plus, you can act as an occasional advisor to help them through the challenging times ahead.
Owning a franchise is always an empowering, fun experience, but sooner or later, all good things come to an end. By determining your goals before you even buy a franchise, you can create a roadmap of your franchising career, and better understand when it’s time to hang your hat, and move on. For more information on how to franchise right now with St. Louis, please contact us!
