How To get Prepared to Sell Your Franchise Business

Tips for the Successful Sale of a Business Franchise

Selling your franchise for the highest profit takes some serious planning. There are many important factors that must be taken into account to achieve the best possible results. As published in the Huffington Post in the article, Graceful Exit: Selling Your Franchise or Business, franchise owners are advised to have an exit strategy in mind long before they actually plan on selling. While it may seem premature to new buyers who are focused on operations and profit margins when they first get started, experienced business and franchise brokers encourage new owners to buy the franchise with an exit plan established from day one.

Company Documentation, Organization and Preparing to Sell

Preparation for a business sale begins with documentation and corporate books. No one factor is more important than having verifiable and accurate financial statements to prove profitability to new buyers. Specifically, the previous three years of business will most likely be evaluated as new buyers and their accountants and attorneys scrutinize franchise records to ensure the franchise business is a good buy.

Establishing policies and procedures for accurate documentation of business operations related to accounting and cash management practices as soon as a business is started ensures there will be no unfortunate surprises for new buyers. Tax planning and risk management practices are also important components of a sound business franchise operation.

Exit Strategies

There are several obvious exit strategies available for franchise owners who are ready to sell. Many owners decide they want to keep the business in the family and transfer it to a trusted family member. According to Franchising.com, that number is as high as eighty-five percent of business owners. Unfortunately, the legacy that many owners imagine handing over to family members does not become a reality or last long due to practical challenges. Experts agree that one of the main reasons legacy transfers of business don’t work out is because the younger members of the family are ill-prepared to take the reigns and manage the business.

Other exit strategies that are likely alternatives include selling to a key employee or the franchisor. Key employees are often well trained and capable of managing the business, but having the necessary funds to purchase the business can be a problem.

One of the best options for selling a franchise includes selling back to the franchisor or to another franchisee seeking to expand their holdings. The obvious benefit of this option is that the franchisor who has to approve of any sale, is likely to agree to this transaction.

Is it time for your to sell your franchise business?

There are many important considerations to evaluate before selling a franchise. Timing can make a significant different in the price a seller can get for a franchise business. Selling in an “up” market when the business is “on the way up” is always a safe strategy for maximizing profits. The good news that sellers can take to the bank is the fact that a profitable business is always valued and can be sold.

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