10 important pointers to understanding and finding franchise buyers
Embarking on the journey to sell your franchise can be a daunting task, filled with uncertainties and the quest for the right buyer who sees the value in what you’ve built. In the complex landscape of franchise sales, understanding the nuances and strategizing effectively can make all the difference between a prolonged search and a successful, mutually beneficial deal.
This article aims to shed light on the critical factors and strategies that can guide you through the process of finding the right franchise buyers. With insights rooted in real-world experience, we delve into 10 essential pointers that navigate the intricacies of the franchise selling process, from leveraging your current cash flow to the importance of perseverance. Whether you’re looking to sell quickly or aiming for the best possible deal, these guidelines are designed to pave the way for a smoother and more rewarding selling experience.
1.There is no silver bullet
You must stir the pot (take a shotgun approach) with a variety of efforts. Strong, consistent, and diverse marketing efforts are required to market your franchise for sale successfully.
2.Cash flow is king
Most franchise resale buyers chose to purchase a business because of the cash flow it produces now. If your business is not producing cash flow, the pool of potential buyers will be smaller and finding a franchise buyer may be more difficult.
3.Bridge the financial gap
If you need to sell your franchise fast, consider offering seller financing or an earnout for a portion of the purchase price. The more eager you are to sell your franchise, the more you may need to be willing to bridge the financial gap for a franchise buyer. Flexibility is the key to sell-ability.
4.The broader, the better
The more people that know about your franchise opportunity, the better your odds are of selling. Confidentiality is important, but you should consider whether or not your buyer could be a current or former customer/client.
5.Look within
Many franchises are sold to employees, and many franchises are sold to fellow franchise owners. Employees and franchise owners may not provide the highest sales price, but if you need to sell your franchise quickly, don’t overlook employees and franchisees.
6.Franchise Buyers don’t pay extra for opportunity they have to earn
Most franchises that are for sale provide the current or future owner with opportunity for growth and improvement. If you want to be paid for that opportunity in your sales price, you’ll need to be able to clearly demonstrate how that work and the resulting benefit has already begun, and how that benefit will continue after the sale.
7.Your franchise start-up costs do not equal franchise value
Unless you find a buyer who is otherwise going to a) start a new franchise, b) in your geographic area and, c) in your specific industry, a franchise buyer is not going to place a value on your franchise simply based on what you spent to get it started. Just like a new vehicle, once you “drive” a new franchise “off the lot”, the value to most franchise buyers is based on the cash flow it produces for the owner(s).
8.Monitor Results and React
Franchise for sale ads should be monitored and assessed monthly. If you aren’t getting the results you want, change the headlines, adjust the price, try a different business category, and update your ads with fresh content. Fresh content can help you find a franchise buyer faster.
9. Know when to hold ‘em, know when to fold ‘em
Some businesses are simply not at a point where they are ready or likely to sell. In this case, it may be best to put all your energy into growing your franchise business now so it can be sold later. Or, in rare cases in which a business is hemorrhaging cash and the owner is unable to continue, it may be best to close the doors. No matter what, selling a franchise will require perseverance. Knowing whether to wait and try again another time or to stick with it requires good advice and guidance from someone you can trust.
10. Don’t give up
Selling a Franchise is not easy! On average it takes 8-12 months to sell a franchise, and many businesses don’t sell the first time. Oftentimes the difference between franchises that don’t sell and franchises that do sell is simply… perseverance.
Franchise Flippers is the premier franchise resale marketplace and resource center. Our franchise resales experts are dedicated to helping franchise buyers and sellers get win-win deals done.
