14 Tips to Selling a Franchise Fast
Making the decision to sell an existing franchise operation is a challenging decision. If you are contemplating selling an existing franchise, or have done so in the past, you understand the difficulty of such a decision.
To complicate the matter, you must also determine HOW to go about selling your franchise business. Deciding is one thing. Doing is another. Not knowing how to sell a franchise resale is often what prevents a franchise owner from taking action. Unfortunately, waiting to take action when it is time to sell a franchise can be detrimental to the operation and value of the business, especially if the franchise owner physically or emotionally needs to move on.
As experts in franchise resales, we’re sharing our valuable tips and resources for selling a franchise business. We want you to be confident in moving forward when the time is right to sell your franchise business.
Before we get to the specific tips, it should be noted that using a business broker, or even your franchise’s corporate sales team, may be the best choice for your situation (look for our article on Selling a Franchise FSBO vs using a Business Broker). There are benefits to using a third party to assist with the sale of an existing franchise operation, and many choose this option. However, relinquishing such a critical responsibility to someone else and absorbing the cost associated with doing so is not something that every franchise seller wants to do without first trying to sell their franchise on their own.
Many franchise owners choose the FSBO (for sale by owner) approach to selling their existing franchise and are successful at it. Thus, our resources and tips are aimed at the do-it-yourself franchise business sellers.
The most important thing to know when trying to market a franchise resale is that there is no silver bullet. Selling an existing franchise requires you to continue stirring the pot with multiple efforts going at once. The more you stir the pot, the faster your franchise resale is likely to take place. This does NOT mean you have to spend a lot of money, but it does mean you will have to spend some time and probably some money. Our franchise business selling tips and resources can help make this process easier.
If you are not ready to spend a little time and money to sell your franchise business, then you should consider hiring a business broker (which may also require time and money), or consider the possibility that you are not yet ready to sell your franchise business.
Whether you are ready to sell or you are just considering it, here are our top tips for selling an existing franchise:
1. List your franchise for sale on FranchiseFlippers.com.
Admittedly, we may be a little biased on this particular tip, but the fact remains that Franchise Flippers is the premier franchise resale marketplace and resource center. This website is dedicated to helping franchise resale buyers and sellers get deals done. Since the website only lists franchise resales, your listings aren’t hidden behind thousands of non-franchised businesses for sale or buried under new franchise opportunities typically found on other sites. Franchise Flippers is exclusively for franchises and exclusively for resales so listings stand out to those specifically looking to buy existing franchise operations.
2. List your franchise on other online business listing websites.
While these popular general business-listing websites can be overrun with tens of thousands of business listings in which sellers and buyers get lost, sites such as BizBuySell and BusinessesForSale are options to consider. They may not be experts focused on franchise resales, but they can help to stir the pot and perhaps turn up a few leads.
3. Reach out to fellow franchise owners in your franchise system personally.
Make individual phone calls to other franchise owners to discuss your plans to sell your franchise. If there are other owners nearby, take them out to lunch and discuss it with them. Ask if they know anyone or have employees who could be interested. Perhaps they would partner with a key employee to expand their operation? An email blast to your franchisee peers may not hurt your cause, but it probably won’t produce results. Talk directly to each franchise owner around you, and ask them to consider if they or someone they know might be interested.
4. Talk to your employees.
Unless you need to keep your franchise resale confidential, discuss it with all or some of your employees. Many employees dream about owning a business just like the one they work in, and some of them will eventually do it. What if that individual is working for you right now? Don’t make assumptions about what they can or can’t do. Their ability to purchase and operate the franchise may be stronger than you think. And in asking, you may find them to be a great referral source, ultimately helping you find a good buyer for your franchise resale.
5. Ask your franchisor about previous franchise inquiries.
They may or may not be willing to share this information, but it is worth asking if they will share any previous inquiries into franchise ownership in your geographical area. This could be especially fruitful if the franchise opportunities for your brand are limited or sold out in your area. Most franchisors keep very close records of every inquiry in a CRM tool, so they should have the info if they are willing to share it.
6. Network through word of mouth.
I once helped sell an existing franchise business by simply mentioning to a part-time employee that there was a great franchise business for sale. The more people you tell about a great business opportunity, the better your odds are of closing the deal. Think about friends, relatives, vendors and suppliers, your business network, maybe even a few select customers. Make a list of these people, then make it a point to reach out to them. Don’t forget to ask them if they would also help you by telling others in their network about your franchise resale opportunity.
7. Offer a referral bonus.
The people you first approach may not be the buyers of your franchise, but they may know someone who is a good fit. You may be one simple conversation away from being introduced to the buyer for your franchise. Sometimes you just need to provide a little extra motivation. Offer a sizable referral bonus of at least $1,000, or maybe as much as $5,000, upon successful transfer of the business to anyone who introduces you to the final buyer.
8. Hold an Open House.
Give an opportunity for serious or casual prospective buyers to learn more about the business. Getting a few potential buyers in the same room can create a strong sense of urgency to pursue your franchise. You may even want to invite people you know (friends, family, neighbors, employees) and use it as an opportunity to teach them about the business and increase your odds for referrals. Don’t be shy! Invite anyone you can think of. I once held a seminar that only 4 people attended, and guess what? One of them ended up buying the franchise!
9. Disclose as much helpful information up front as possible.
Serious franchise resale buyers want meaningful information. Provide information about your franchise operation that will catch the interest of buyers. Limited information creates limited interest. Think of it as listing a house for sale. A listing for a home that simply states the price and the location, but lacks pictures or helpful information about the home, will be quickly passed over. Whether you are building a profile or having a discussion with a prospective buyer, provide lots of information. You can still reserve certain details for serious inquiries, but don’t be too generic in the initial information you provide. Be captivating!
10. Be willing to sell franchise units individually.
I sold my collective franchise units for a nice 7-figure number, but it required multiple transactions to multiple buyers. If you own multiple units, selling your entire franchise operation in one transaction may be more desirable, but it will likely be more difficult to find the one buyer you need. The higher your price point, the smaller the pool of potential buyers. Being willing to sell locations individually might be the strategy that actually gets them sold. You may also net better terms and a higher total price.
11. Think, speak, and act positively!
Believe that you have a compelling business of value to sell. This is absolutely true for most franchise brands! This mindset will make your franchise resale more attractive to interested parties. Even if you are burned out or in difficult circumstances, you have to focus on the positives. Remind yourself what you love about your franchise, focus on the strengths and opportunities it provides, then TALK about those things! This is what creates interest from others and makes them want to become part of owning a franchise. If you are not sure you can communicate positively, consider hiring a business broker to sell your franchise.
12. Offer and advertise seller financing.
Plenty of people are looking to buy an existing franchise operation, and many are capable of running a successful business, but few have easy access to the cash necessary to buy one. Additionally, getting outside financing from a bank or lender is usually a lot of work, a slow process, and often yields a disappointing result. Some franchise resale buyers only look at opportunities that offer seller financing. You don’t have to finance the whole deal, and we wouldn’t recommend you do, but providing some seller financing will increase your pool of potential buyers. Look for more from us on this topic soon!
13. Assign a family member, spouse or employee to assist you
in your efforts to sell your franchise. As a busy franchise owner, it is difficult to redirect your efforts from running your business to selling your business. Having a point person to help you make calls, post ads, or gather and organize information could be a critical step in selling your franchise. Don’t let your busy schedule get in the way of moving ahead. If you need help, and don’t have the right person, you may want to consider talking to a business broker.
14. Be patient, but not passive.
Selling an existing franchise can take 6-12 months. An active and aggressive approach to marketing your franchise resale will make a significant difference in getting to the finish line faster.
The mission at Franchise Flippers is to help franchise buyers and sellers win! Selling your franchise business is part of the allure in the franchise industry. It is the full realization of the American Dream in small business! Let Franchise Flippers help you achieve it!
Are you a franchisor or franchisee with a single or multiple units for sale? Contact us today to see how we can help you successfully grow or sell your franchise operation. www.franchiseflippers.com