10 tips to preparing your franchise for sale
Venturing into the sale of a franchise requires not just the decision to sell but a meticulous preparation strategy to ensure the journey leads to a successful conclusion. This endeavor, fraught with complexities and the need for strategic foresight, demands a deep dive into the intricacies of what makes a franchise sellable and attractive to potential buyers.
In this article, we present a curated list of the top 10 indispensable tips aimed at preparing your franchise for sale, crafted to guide you through the multifaceted process of readying your business for the market. From fostering a collaborative relationship with your franchisor to maintaining impeccable financial records and addressing operational challenges, these guidelines are designed to equip you with the knowledge and tools necessary for a smooth and effective sale process. Whether you’re a seasoned franchise owner or new to the scene, this comprehensive approach to preparation will not only enhance the appeal of your franchise but also position you advantageously in the market, paving the way for a successful sale.
1. Communicate and collaborate with your franchisor
You and you franchisor are partners, and your teamwork helps to enable a successful sale. Even if your franchisor is not involved in finding your buyer, they will be involved with approving, disclosing and onboarding your buyer. It is important to work collaboratively with your franchisor when preparing your franchise for sale, and throughout the entire process.
2. Review your lease and franchise agreement
It is important to understand your obligations in both agreements, such as transfer fees and lease assignment requirements before you get too far down the road in your sales efforts.
3. Maintain clean and current books and tax returns
You will eventually need to provide clean financials and current tax returns to serious buyers and their lenders. It is difficult to sell a franchise without these ready.
4. Determine and understand the practical value of your franchise to a buyer
Understanding the realistic value of your business so that you can set the right asking price and confidently and effectively negotiate with buyers is critical in preparing your franchise for sale.
5. Know the discretionary earnings your franchise produces
Understanding the benefit that a business provides to it’s owner(s) is one of the most important factors to franchise buyers. It is critical to know and be able to demonstrate to a buyer what your discretionary earnings ar to a buyer. This is an important step in preparing your franchise for sale.
6. Maintain and demonstrate a positive attitude
It is important to have and share a positive belief in your brand and your franchise operation. Your attitude will either build the interest or lose the interest of buyers. It is easy to feel burnt out. Be sure your attitude is in the right place before you begin serious efforts to sell your franchise.
7. Clean up your location, equipment, uniforms and signage
A business that both performs well AND looks good is a more attractive and “sellable” business. Financial and operational performance is important, but don’t overlook the appearance of your business to prospective buyers when they walk into your location or observe your operation.
8. Address significant operational issues
Franchise buyers are unlikely to purchase a business that has significant operational issues that they will have to fix if they buy it, such as significant staffing challenges or little marketing efforts in place. Fully preparing your franchise for sale requires that these types of issues are addressed.
9. Don’t wait until it’s too late
Selling a business is difficult and it takes time. Develop a marketing plan in advance and be persistent and patient in executing it. It is difficult to sell a franchise when there is only a short period of time to find a buyer, or when the owner is burnt out.
10. Get help and support from an expert
Most people have never sold a business before and that may be the case for you too. Additionally, most business owners are very busy. Getting advise and support from someone you can trust and rely on is often the difference between a successful franchise sale and no sale at all.
