Reselling Your Franchise
Reselling Your Franchise
When a franchisee wants to re-sell his or her franchise, he or she probably wants to get all of the money they have invested in the business, and more, if possible. You may be wondering what the price is based on. It is a multiple of the cash flow of your existing business. If your franchise is profitable and has a track record, there is a good chance you will be able to make money by selling it, based on the money you have invested in it.
In addition, the fact that you are selling a franchise rather than an independent business makes it more likely that you will make a profit on the sale, because the buyer is getting other benefits besides the profitability of the business itself, including the brand name which draws in customers and the opportunity to use the services of the franchisor, though, of course, they will have to pay royalties for those things just as you did when you owned the franchise. The buyer will be drawn to your franchise because you have done all of the hard work getting it started and they can reap the benefits of working with the franchisor’s business model.
If your franchise is not yet profitable, you may have a harder time selling it to a buyer, even if they are drawn to the franchise model. Some buyers may not particularly care that the business you are selling is a franchise, and will just see an unprofitable business and move on. Other buyers may still be interested, but you will probably have to lower your asking price if you are determined to sell your franchise. If you are asking more money than a new franchise costs, the buyer may not be interested in buying your unprofitable franchise. They will have to consider whether or not certain aspects of your franchise are more appealing to them than buying a new franchise. For example, you may be able to sell your franchise at a higher price than a new franchise if your territory is particularly desirable, if you’ve done a lot of work to get things going and have just not quite broken even yet, or if you’ve done marketing to help get customers interested in your territory already. These things will add value to your franchise in the mind of the buyer, even if it is not yet profitable, and you may be able to sell it for more than you bought it for. However, if you are very determined to sell your franchise quickly, you will probably need to lower your price even more than the cost of a new franchise.
Reselling Your Franchise - To learn more about this author, visit Sebastien Page's Website.
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If you are thinking about re-selling your franchise to a new franchisee, for whatever reason, how is that done? You might be wondering how it differs from selling an independent business, because you don’t technically own the franchise, you only own its assets. You are renting everything else, from the brand name to the business model of the franchisor.
When a franchisee wants to re-sell his or her franchise, he or she probably wants to get all of the money they have invested in the business, and more, if possible. You may be wondering what the price is based on. It is a multiple of the cash flow of your existing business. If your franchise is profitable and has a track record, there is a good chance you will be able to make money by selling it, based on the money you have invested in it.
In addition, the fact that you are selling a franchise rather than an independent business makes it more likely that you will make a profit on the sale, because the buyer is getting other benefits besides the profitability of the business itself, including the brand name which draws in customers and the opportunity to use the services of the franchisor, though, of course, they will have to pay royalties for those things just as you did when you owned the franchise. The buyer will be drawn to your franchise because you have done all of the hard work getting it started and they can reap the benefits of working with the franchisor’s business model.
If your franchise is not yet profitable, you may have a harder time selling it to a buyer, even if they are drawn to the franchise model. Some buyers may not particularly care that the business you are selling is a franchise, and will just see an unprofitable business and move on. Other buyers may still be interested, but you will probably have to lower your asking price if you are determined to sell your franchise. If you are asking more money than a new franchise costs, the buyer may not be interested in buying your unprofitable franchise. They will have to consider whether or not certain aspects of your franchise are more appealing to them than buying a new franchise. For example, you may be able to sell your franchise at a higher price than a new franchise if your territory is particularly desirable, if you’ve done a lot of work to get things going and have just not quite broken even yet, or if you’ve done marketing to help get customers interested in your territory already. These things will add value to your franchise in the mind of the buyer, even if it is not yet profitable, and you may be able to sell it for more than you bought it for. However, if you are very determined to sell your franchise quickly, you will probably need to lower your price even more than the cost of a new franchise.
Reselling Your Franchise - To learn more about this author, visit Sebastien Page's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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