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At Franchise Direct, we service budding entrepreneurs by giving them the opportunity to match up with a franchise that makes sense for them. And what makes sense for one person is different for the next one...and so on. Naturally, individuals are interested in different ways to use their skills to earn money in a franchise and also interested in different lifestyle choices to suit their personal needs.
On the flip side, deciding when to sell a franchise is no different. It should be based on what you want and your goals. Ideally, it occurs at the best time in the market, but overall, it is about first deciding what matters most to you personally.
Just last week, this topic came up with a couple who own a large, organic coffee import company. It is not a franchise, but coffee is big business, and they have a retail location too. They are at the crux of expansion or sale—staying “as is” is the wrong financial and personal combination.
While the wholesale side is lucrative, it is the retail site that they most enjoy. She would rather spend her time making a cup of espresso than negotiating foreign contracts and unpredictable harvests. If making money were the only goal, they would focus on wholesale imports and grow the business more. But they are getting tired of the long hours and want to simplify rather than expand. Their choice to sell the import company will be a boon to someone else who is better suited and excited about the opportunity of growing an organic coffee roasting company—something this couple no longer want to do.
Every franchise owner has three choices when it comes to the end of their franchise tenure, and they are very simple:
1. Keep the business and plan for succession to adult children, siblings, or an employee,
2. Sell later in a strategic way with planning and forethought, or
3. Sell now, and get the heck out for any number of reasons.
If you are considering a sale, you ideally want to be in category #2. If you are selling quickly, it's probably for a not so good reason—you hate how you spend your days or maybe the business is distressed, and you want to cut the bleeding. For most who do not expect children or others to take over, strategically planning and positioning your business for sale is preferred.
Strategic sale of a franchise means preparing for when the market is at its highest and for when you get an excellent offer you want to accept. To best prepare for that magical moment, you want to ensure that any due diligence by a prospective buyer goes very well. And that means keeping your accounts and financial statements in order. Clean up your books, eliminate personal expenses from all accounting, and enlist the help of a business broker to review them.
Next, follow your market closely and monitor its successes, business shifts, and movements. If you can wait through a downturn, for example, you will profit more when you sell. On the flip side, if your industry is slowing fading away due to technological changes, waiting would not be wise, even if it means getting less money.
No matter your type of franchise, the decision to sell is about personal goals. Maybe you want to sit on a tropical beach for the rest of your days with money in the bank. Maybe you want to own a different franchise and prefer to sell the one you have because the change will allow you to attend your children’s soccer games. Or maybe starting from scratch and flipping businesses is what makes you happy. Any of these is a perfectly good reason to sell your franchise. Better to adapt a business to your life than to adapt your life to a business.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.