How to buy/sell franchise

• Jul 16, 2022
• |
• BestBizFinder

There are three main factors to consider before you decide to put your franchise up for sale. Furthermore, these same three factors apply to those who are considering positioning an existing franchise location.

 1. Discuss future plans

 The first step to take before selling a franchise is to discuss your plans with your franchisor for franchising. It can be difficult to tell a franchisor that you are selling your franchise, but it is important to note that every franchisor and franchisor relationship will eventually come to an end. You are not the first franchisor to walk out of a relationship with their franchisor.

Feel free to use some of the same reasons you went into the franchise to get out of your franchise, for example, brand recognition, customer loyalty. These are assets that can be used, not only as a franchise buyer but as a seller. Don't be afraid to use it as a tool to sell your business. If you believe that your franchisor may make exiting the franchise difficult, you should consult with your attorney.

2. Document Collection 

Secondly, it is essential to ensure that all your documents are in order. Buyers who see omissions or inconsistencies in the seller's papers will see you as untrustworthy, jeopardizing the relationship between the two parties. Furthermore, delays are possible if there are errors in your papers that need to be corrected.

In small business transactions, trust between buyer and seller is imperative. When trying to make a successful business transaction, you should be able to tell a story to that buyer. This story must be supported by valid papers and documents.

3. Understand the financing options 

Finally, a franchisee buyer is unlikely to have ready cash at their disposal to purchase your business. The buyer will most likely need financing to enter the franchise. Therefore, you should see what type of financing options is available to the buyer. Your attorney or the franchisor's attorney may be able to provide the best recommendations for finding the necessary financing. This will allow you to easily sell the business and provide price verification for your business.

The buyers of the franchise have to take a risk, similar to the one you took when you decided to go into the franchise. Making sure the buyer feels comfortable about their investment is a top priority. Ensuring this convenience must be supported by appropriate and complete documentation, and a source of funding. This will also help ensure that the sale of the company takes place on your terms.

 Advantages and disadvantages of buying a franchise

In the franchising business, the franchisor provides an improved method of doing business and ongoing guidance, regulations, and assistance against periodic payment of fees and/or purchases.

Purchasing a franchise can be a viable alternative to starting your own business. Listed below are some of the advantages and disadvantages of buying a franchise.

Advantages of buying a franchise

Franchises provide the independence of small business ownership backed by the benefits of a large business network.

·       You don't necessarily need work experience to run a franchise. Franchisors usually provide the training you need to run their business model.

·       Franchises have a higher success rate than the start-up companies.

·       You may find it easier to obtain the financing for a franchise. Purchasing a franchise can be less expensive than starting your own business of the same type.

·       Franchises often have a solid reputation and image, proven management and business practices, access to national advertising and ongoing support.

     Disadvantages of buying a franchise

·       Purchasing a franchise means entering into a formal agreement with your franchisor.

·       Franchise agreements define how the business is run, so there may be a little room for creativity.

·       There are usually the restrictions on where you operate, the products you sell, and the suppliers you use.

·       Poor performance by other franchisees may affect the reputation of your franchisee.

·       Purchasing a franchise means continuous sharing of profits with the franchisor.

·       Franchisors do not have to renew the agreement at the end of the franchise term.