So, you bought a franchise, and now you want to sell it? You might be thinking that I’ll talk you out of that… but you may be wrong!
When it comes to selling a franchise business, it’s often the case that owners don’t even realize their franchise business is theirs to sell! But that’s one of the greatest benefits of building a franchise business: you’re building this asset that has equity that’s going to be valuable to somebody else because people think about owning a business, but they don’t want to start from scratch. They’re willing to pay you a multiple of what you’ve built if you’ve built a business to that level. Why wouldn’t you want to sell it?
What should you consider when you’re thinking about selling your business? You, as the consultant who’s worked with sales over the years, is number one! Alert your franchisor because they will alert consultant groups about the resale. They might be able to find you a buyer for your business. Don’t be afraid to tell your franchisor that you’re ready to sell your business because if you’re ready to get out, they want to help you get out. The buyer interested in buying your business is going to ask to see the numbers. They’ll want to justify the asking price that you’ve put on your business–so have your tax returns ready!
In addition to your tax returns, have your story straight. They want to know if this business is so great, why are you selling it? People don’t understand that businesses are built to be sold. You take some amount of money, invest it in a company, turn it into this seven-figure revenue business that’s netting to you some percentage of that, and then someone’s going to pay you a multiple of that net return to go away? That’s part of the biggest advantage in owning a business. But the buyer coming in may not be as educated or savvy, especially if they’re not working with someone like The Daly Coach. They might not know that this owner who’s selling the business built it intending to sell it. If you can put a multiple on what you’ve built in, somebody is going to be willing to pay you that. Why wouldn’t you build your business to sell it?
If you want to be a confident franchise owner, even if you’ve struggled in the business, or you have an idea of why you think your business hasn’t been as successful as you wanted it to be, don’t share that with your buyer. Share enough that they understand what you’ve built. Leave the investigation of your business and your opportunity to that candidate. Let the buyer do his or her own due diligence to determine what is necessary to drive success because what they see as a challenge may not be what you see as a challenge. They will talk to other franchise owners to understand how the business should look and sound from people that are doing well; then, they’re going to compare and contrast the stories. Thus, leveraging them to counteroffer your asking price.
The last piece of advice is to be patient. Selling a business is not going to happen overnight. It may take six months to a year. Give yourself the time. In the end, I believe that all businesses should be built to be sold. Congratulations if you’re at this milestone, or you’re ready to put a multiple on your business and exit! I’ve interviewed franchisors who have told me that some of their franchise owners make the biggest hit on their investment upon exit. You’d be foolish not to try to sell what you built.
If you’re thinking about investing in a franchise business with the purpose of selling it, please reach out to me to start the conversation right now!