WiseBizz - Your online resource for success in both home and office business matters...

Your Number 1 Stop For Business Resources

Idea - Execution - Results

Franchise For Sale

Franchises

What if it doesn't work out? Franchise for sale

Franchises are just like any business; sometimes they don't succeed. In a case where a franchisee wants out, the good news is that franchises don't last forever. Your term agreement does have a start and stop date, no matter if its five years in the future or twenty. There is always 'life after franchise' but if you can't wait, you can always put up your franchise for sale.

Ticks!


Certain circumstances make it a good idea to put up your franchise for sale immediately:

  • If the area where your franchise is located is declining and there is no hope for rejuvenation
  • If the market has become glutted and competition is too fierce
  • If the brand has grown 'old' in the eyes of the consumer

If you plan to sell, keep an eye on the economy; low interest rates mean plenty of financing for potential buyers.

Hanging a 'Franchise for Sale ' sign depends on the terms of your franchise agreement, which is usually drawn up in the franchisor's favor. Check what selling entails. A 'buy back clause' gives the franchisor the right to purchase your franchise before a private buyer, often for a low price. A 'right of first refuse' gives the franchisor the right to be the first to refuse to buy, before you are allowed to communicate with private buyers. Even if the franchisor originally refuses they may still put in an offer.

There is usually a transfer fee if you sell to a buyer and the new franchisee may have to sign a new agreement. See what your franchisor offers. For example, Wendy's waives the $5,000 transfer fee if you hand the franchise over to a relative. If you sell to your franchisor, the company will send an appraiser to estimate the value of your franchise, which you may have to pay for.

There are always options if you can't find a buyer. You can still profit from all your hard work, even if you relinquish the brand name and lock up your store. Return any property you leased and sell any assets you own, including the building, the furniture, any kitchen equipment, trucks, even the light fixtures. You still have the store, perhaps you want to start a new business.

If not, move into the corporate scheme; your franchiser is more likely to hire someone familiar with the company than an outsider. Use your experience to become a franchise counselor and advise franchisees. Don't let all your knowledge go to waste.