HOW TO SELL A FRANCHISE?
As a seller who wants to sell a franchise, you have to provide some specific information buyers check. Some of which includes:
- Annual income
- Annual overhead costs
- Business permit costs
- Information about the location of the franchise.
All these mentioned above in bullet points are some of the information buyers want to know before purchasing a franchise. Ensure you input all the necessary information as much as possible to attract prospective buyers and gain their attention to buying your franchise. In this aspect, we will be looking at five different steps that will help you sell your franchise quickly.
1. Check Your Franchise Agreement
A franchise agreement is an agreement or contract binding the franchisor and franchisee. It entails information such as the parties to the contract, who owns the intellectual property, timing of the deal (the beginning and the end), and other regulations of the agreement.
However, the franchise agreement varies depending on the franchise for sale and what the franchisee and franchisor’s agreement. Ensure you review the franchise agreement to know and understand the terms of understanding in regards to the franchise on sale.
There are cases whereby the terms of the agreement may state you sell the franchise back to the establishment it was initially purchased. So the first important thing to do is to review the sales contract.
2. Valuate Your Franchise
The next step to take is to evaluate your franchise. You have to know how much your franchise costs. Before you can sell a franchise, you need to know the value. That’s why you need to employ an appraisal, someone qualified and experienced in determining the cost of a property. This is also part of the reasons why you need to review your franchise agreement. It may be stated in the contract that the franchisor holds the right to hire property appraisal. The appraisal has to:
- Inspect the property
- Check the market for similar franchise
- Check the income rate and tax history
All these would allow the appraisal to evaluate the resale value of the property in question.
3. Create a business profile
It would be best if you had a nice profile for your franchise business. A well-detailed profile should contain all the necessary information about franchise- type of franchise, its description, regulations, and so on. This is necessary to attract prospective buyers to invest their money.
Where would this business profile be created?
- Company’s website
- Google My Business
4. Franchise Listing
The next step is to list your franchise on several business websites. Some of the websites we found include:
This is a way of marketing your franchise for people to see. Sites such as Franchisegator allows individuals to market their franchise for potential buyers. Another alternative is to make use of a franchise broker. This broker will serve as a middleman for you and help you find a suitable buyer.
5. Your Sale Price
This step is to determine how much you are going to sell the franchise. That’s why you have hired an appraisal. The appraisal will help you find the right price range for your franchise. However, if it states in the franchise agreement that the franchisor holds the right to hire an appraisal, then you don’t have much negotiation to do.
6. Negotiating a Sale
This is the last and most important step since it is the step that deals with the money. The purpose of selling your franchise is to make profit. Besides that fact, you must also consider the fact that no one would purchase a franchise at an unnecessarily high price. So while trying to negotiate the franchise fees, one must consider the franchisee. Ensure you have a limit. This is the point where you can’t go below to ensure you make enough profit from the sale. Once you have chosen your price limit, you are good to go.
In conclusion, as a business owner trying to sell a franchise, it is advisable to shield the information from the employee. This is because it can cause panic or fear and reduce the value or efficiency of the business. Also, ensure that your pricing is within the price range of your competitors. This is why you need a professional appraisal.
Selling a franchise is not something one should just jump into; you may be doing it wrongly. This article will help you sell a franchise successfully without losing out on anything.