Achieve Best Price for Your Franchise Business

Selling a franchise business is no longer as difficult as it used to be. More people nowadays are aware of the franchise concept and therefore to find a buyer, is easy, if your business is already profitable.

When you initially bought your franchise, you had to sign a contract. This franchise agreement laid down guidelines and procedures for running your business as well as all the obligations that you and the franchisor have to each other. It should also have clear instructions as to how you can sell your business when you are ready to move on.

Often, the franchisor will have a clause allowing them to buy you out at the same price as the highest bid. This clause is there to protect them if they feel that you are willing to sell the business for a very low price and less than the true value.

Every year, thousand of franchises are bought and sold on the internet. There are dedicated websites set up just purely to help with the sale of a successful franchise. They can aid you with your exit strategy and give you further advice. It is relatively inexpensive to advertise your business for sale on the net. This method for selling your business will also ensure that local people are not aware that your business is for sale.

Try and be discreet as possible so as not to damage your franchise business whilst it is up for sale. Staff moral can plummet very quickly if they feel that their long term prospects might be weakened. You could also lose customer loyalty whilst your suppliers could become more cautious if they believe that you are no longer committed to the future of the business.

How does one go about determining the asking price for their franchise? The valuation of your business is done almost the same way as for any normal business for sale. If you choose to appoint a valuation expert, he (or she) will examine your business for future profitability and suggest the best price he believes you will be able to achieve for a sale within your required time frame.

However, other areas that could impact on your valuation include numbers of clients, overheads and the state of your premises. The expert will also examine how well trained your staff are and how the business will cope with a new leader at the helm.

At the end of the day, most of the valuation will be based on future growth potential and profitability of the business. However, there are some simple exercises you can take to maximize the price achieved:

Make sure you examine all your costs and weed out and remove any that are unnecessary prior to advertising the business.  Tidy up your premises taking especial care of the entrances and exits. Have all your accounts well prepared and brought up to date. Make sure that all your staff are well trained, smartly dressed and on their best behavior when any potential buyer comes for a visit.

Every business needs an exit plan. What is yours?

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