Want to Leave Your Franchise Business Behind? 4 Exit Strategies to Consider

When contemplating the exit of a franchise business, it may be simple to imagine the rationale for exiting is because of one in all two potentialities: Both the enterprise was so profitable that somebody made a suggestion to buy it, or it was such a failure that the proprietor needed to “get out.” As with most issues, the actual reply is usually extra sophisticated. There are many different causes somebody is likely to be trying to exit their enterprise.

Within the pleasure of beginning a franchise enterprise, an exit technique is regularly neglected, regardless of its significance within the planning course of. That is comprehensible since we normally do not like to consider the top of a journey earlier than it is begun. Nevertheless, throughout my years as a franchise advisor and franchisee, I discovered the significance of having an exit strategy in place. The perfect factor you are able to do? Plan forward so you are not making vital future selections below duress.

Optimize your exit worth by planning earlier than a serious change forces your hand. Frequent causes individuals exit a franchise embody:

1. Getting a job provide they cannot refuse
2. Deciding they’re prepared for retirement
3. Experiencing a serious life change (divorce, household change or sickness)
4. Receiving an unsolicited provide for a profitable enterprise
5. Selecting to accumulate or increase in one other enterprise
6. Breaking apart with a enterprise companion
7. Monetary struggles in an current enterprise

For this final purpose, it is essential to keep in mind that simply because the enterprise did not ship the outcomes desired by the franchisee, it doesn’t suggest there isn’t a worth. It is common for enterprise house owners having hassle working a enterprise to promote it to a brand new proprietor who can step in and make it profitable. In any case, preliminary efforts by the unique proprietor have seemingly shortened the launch ramp for a brand new purchaser, together with vital and time-intensive startup duties resembling securing a business lease, procuring tools and stock, recruiting and coaching staff and constructing a buyer base.

With all that in thoughts, listed here are 4 methods you may exit your franchise.

Associated: 6 Things to Consider When Getting Out of a Franchise Agreement

1. By means of the franchisor

This feature depends upon the maturity of your franchise system. For instance, say your franchise model has been round for 40 years. On this situation, they might have a whole staff devoted to resales, together with particular applications in place to work with lower-performing areas to encourage them to cycle out. Alternatively, say the system is a youthful franchisor — on this case, the model might not have a resale staff in place, however they might nonetheless have relationships with brokers or consultants to help you in a sale. The primary level right here? Do not preserve your franchisor in the dead of night — you and the franchisor have aligned pursuits (what’s good for you’ll seemingly be higher for them in the long term).

That stated, preserving open communication with the franchisor doesn’t imply they are going to remedy the issue for you, however there might be extra choices obtainable if you’re clear.

2. Rent a enterprise dealer

Promoting a enterprise will all the time take time, but when it is advisable to transfer extra shortly (promote in six to 12 months), the very best chance of success usually lies in hiring a business broker in your space. The good thing about working with a dealer is their business data and entry to a big database of consumers in your native market. It is their enterprise to ship out alternatives to their giant community of potential consumers regularly.

Enterprise brokers are professionals at conducting transactions — to allow them to additionally join you with different individuals who will assist with the method (attorneys, due diligence, closing, escrow, and many others). Remember: Like a great actual property agent, they’re seemingly on the lookout for an unique itemizing. These agreements are sometimes in place for 12-month phrases, though phrases are sometimes negotiable. You may additionally be capable to negotiate payment exclusions for particular consumers resembling promoting to a different franchisee, and many others.

How a lot are the charges? The charges might be a share of the ultimate sale — count on this to be as a lot as 10% or a minimal flat price on smaller sale transactions.

3. Go it alone and promote your self

On the finish of the day, there’s nothing that claims you may’t attempt to sell your franchise independently. Perhaps you’ve got prospects that love your enterprise and would dream of proudly owning it at some point. Often, even in the event you weren’t fascinated about promoting, somebody might strategy you and put in a suggestion. On this case, you may rent an legal professional and forgo the dealer course of (win-win).

Whereas this may occasionally seem to be an interesting possibility, there are some things to think about. If you do not have a available purchaser, it takes a considerable quantity of selling to advertise your enterprise of sale. For instance: Take into consideration promoting your own home with out an agent — not as many individuals will see it and you will have to pay a purchaser’s agent regardless. The primary problem in promoting independently is having the ability to discover prepared, keen and in a position consumers.

Associated: Before You Enter into Franchising, Consider Your Exit

4. Contact a franchise advisor

A lesser-known possibility could also be to contact a franchise consultant who works together with your franchise model (select a franchise advisor who’s a part of a nationwide community in your market). Whereas they in all probability haven’t got as giant of a neighborhood database as a enterprise dealer, they’ve a gradual stream of consumers trying to begin a franchise enterprise. They could have present candidates or former candidates that align together with your model. And although they might not have as giant a neighborhood database of a enterprise dealer, an skilled advisor residing in your market might have potential consumers for you — however count on that any charges required are paid by you, not the franchisor. A franchise advisor will not be a silver bullet, however it’s value having a dialogue.

In the end, there isn’t a one-size-fits-all course of for establishing an exit technique, however it’s essential to do the analysis early so you are not making any hasty selections from a place of duress.