- Do Your Homework
The first question to ask yourself is "What is my motivation to sell?" Any serious buyer will want to know this before they consider making an offer on the franchise resale. Why do you want to get out of the business? Why now? Are you ready to retire, want to move out of town, or just looking for a change of pace? If there are issues with the franchise, or anything that could reflect negatively in the future, you may want to consider proactively addressing these issues before they become deal breakers with potential buyers. Understand and be willing to share the status of key business components such as your employees as well as your lease or other real estate related issues. Transworld will help you to identify any changes that might hinder future performance of the franchise such as legal concerns and upcoming changes in regulations.
- Gather the Franchise Financials
Getting your financial paperwork in order ahead of time can help save you and potential buyers headaches as you go through the franchise resale process. Be sure you understand what the financial performance of your franchise has been over the past year or two. Be aware of any financial trends and their underlying causes, particularly if the recent trend data is flat or negative. Transworld understands that this can be a daunting task. We are here to help you get everything in order.
- Understand Your Franchise Valuation and Determine the Sale Price
Understanding the market value is perhaps the most vital step to ensuring a successful franchise resale. The exact approach may differ depending on the type of franchise but there are some commonalities across the board. Assets will not often make up the bulk of any valuation as earnings and sales usually are the final drivers of value. However, don't overlook the importance of intangible assets such as low turnover, profitability, brand awareness and ongoing contracts. Transworld has worked with numerous franchise resales and can provide the expertise to make an accurate franchise valuation and properly seek the best outcome for your sale.
- Organize and Review Franchise Agreement
Transworld understands that an important part of any franchise resale are the terms and conditions of the resale including agreements to confidentiality. The Franchise Agreement is a document that sets out in broad terms an overview for the franchise resale. It documents the release of payments, responsibilities for each party, and periods of confidentiality. Most importantly, it serves as a timetable towards completion of the franchise resale and deadlines for every step of the deal. Transworld will help you organize and review the Franchise Agreement.
If you have decided it is time to sell your existing franchise, the experienced brokers at Transworld Business Advisors can help. Transworld has many years of experience working with franchises and we offer a franchise resale program to help you successfully sell your franchise. Our partnership with United Franchise Group means that we have a vast understanding of the franchise business. We know the ins and outs and can put that knowledge to work for you throughout the process of selling your franchise. In franchise sales terminology, the purchase of an existing unit is referred to as a "resale." All franchisees have a life cycle and almost everyone who buys a franchise will at some point want to sell it. Resales are very common and have neither a negative or positive reflection on the franchise network. Selling a franchise offers potential buyers some distinct advantages, however, without some proper prior planning, it can also present some challenges. Franchise resales allow buyers to immediately start accumulating cash flow. Selling your franchise offers buyers an existing customer base, staff, location, and goodwill from an up and running business that is part of a trusted and recognized brand. It is essential that you know what to look for and what to avoid in this process - and the experienced franchise resale experts at Transworld are here to help. The following tips from our experiences team will help you with your franchise resale: