10 Tips To Selling A Franchise Resale
For the majority of business owners, there comes a time when they are ready to sell out. This may be due to retirement, illness, relocation, or other reasons. Selling a franchise resale can be as frustrating as selling any other type of business, but it doesn't have to be. Here are ten tips to help you make your franchise resale easier.
1. Let the franchisor know that you are planning to sell out - Many franchisors have rules regarding a franchise for sale. They will have criteria that the buyer must meet, and the franchisor may be able to assist you in the sale. Letting them know upfront will save you quite a bit of time and prevent headaches.
2. Make sure your franchise unit is prepared for the sale - In order to get the best price for your franchise, it needs to be in tip-top shape. Check the building and equipment. Also, make sure the records for the franchise are in order. The financial records should be accurate, as the sales price is usually based on profits, and those profits must be proven to potential buyers.
3. Know why you are selling - This is one of the first questions a potential buyer will ask. When you are selling a franchise opportunity, make sure that your reason for selling won't have a negative effect on a potential buyers decision. Retirement, relocation, and illness are all good reasons to sell. Poor sales, or problems with the franchisor, are not good reasons to give a potential buyer.
4. Price your franchise to sell - Make sure that you price your business right. You don't want to price it too low, but you certainly don't want to price it too high either. Keep in mind that what the business is worth to you - in terms of emotional value - may not match what the franchise opportunity is worth on the market. Be prepared to negotiate. Check with your franchisor to find out how much other franchise resales have sold for, but keep in mind that location and profits are major pricing factors.
5. Know your options for selling - Before you sell a franchise, you need to know what options you have. In some cases, the franchisor will help you sell the franchise. If this is not the case, you can either sell the franchise yourself, or go through a business broker. Exploring all of the possibilities will help you make the best decision.
6. Plan your advertising campaign - Look at all of the options available to you for advertising your franchise for sale. Classified ads are one option, but there are so many others. Talk to people who are likely to know buyers who are in the market, such as bankers, trade associations, attorneys, and accountants. Look online at all the various sites where you can list your franchise for sale as well. Click here to advertise your franchise for sale for free at GlobalBX. If you are using a business broker, find out how and where they plan to advertise your business for sale.
7. Know your ideal buyer - Determine what you are looking for in a buyer ahead of time. Make sure you have checked with your franchisor about any special qualifications that a buyer must meet. Knowing the type of buyer that you are looking for will help you save time by weeding out those who do not meet the qualifications.
8. Confidentiality is important - Employees, customers, and vendors are usually not made aware of the owner's intent to sell until the sale is almost complete. Too many people assume that if a business is for sale, it is on the verge of bankruptcy. This hurts a business. Since the sales price is dependent on the profits a business brings in, it is important that you demand confidentiality from brokers and prospective buyers.
9. Plan your sales pitch - Practice the tour that you will give prospects in advance. Know what you will show them, what you will tell them, and how you will answer potential questions. They will want to know why you are selling, the demographics of your market, information about the franchise system, and annual profits and losses. The better you prepare your sales pitch, the better it will be. Once you start talking to prospective buyers, pay attention to the questions asked, what they were interested in, what they were not interested in, what piqued their interest, and what turned them away. Use this information to make your sales pitch to the next potential buyer even better.
10. Offer assistance to your buyer - Offer as much assistance to the potential buyers as possible. Help them complete their application with the franchisor. Make a deal to help them run the business for a specified period of time after the sale. Knowing that they won't be left on their own right away will often convince a potential buyer to go through with the sale.
Using these tips, and having reasonable expectations, will enable the sale of your franchise to go much smoother.
Click here to Advertise your Franchise For Sale for Free.
Click here to return to our Seller's Guide.