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Buying a Franchise With Clear Resales Strategy

One of the things I have noticed when talking to some well-known and established franchisors, is how concerned they are about admitting they have franchise resales or transfers in their network. Their concern is that the resales will be perceived as a negative towards their brand and might dissuade other prospective buyers from considering their franchise. In addition, the market as a whole might see it as a bad reflection of their brand and network.

It seems impossible to suggest a mature franchise network would not naturally have franchisees looking to sell their business. It is healthy and part of the evolution of a successful happy franchise network. Clearly in most cases when a franchisee buys a location, they will someday want to sell it on for whatever reason. Some may want to cash in on the investment they have added to their franchise, whilst others may want to sell due to ill health or simply because they chose the wrong business in the first place.

This does not in any way mean that the business for sale is a bad investment or business opportunity. In the case of the thriving business, the new franchisee will be buying added market presence and existing business turnover. In the event that the business for sale is a turnaround opportunity and its current franchisee, for whatever reason is not making it work; then a new buyer with different skills and energy might turn the business round and subsequently add to the overall profitability of the network.

Surely any prospective franchisee considering to buy into the franchise network, should check the level of the franchisors support to the exiting franchisees. They should check if the franchisor has a clear resales strategy for them and that they see it as their obligation to assist their franchisee when the time is right for them to sell.

So what can be done to change this negative resales mindset? How do you create a “Resales are good and should be part of every network mindset” among the franchisors? The fact that so few franchisors have a Franchise Resales Manager or a member of their team who is responsible for transfers tells it all. The responsibility of handling resales tends to be no one in particular’s responsibility within many franchisor organizations and it is not surprising as there are no obvious financial benefits. There are of course benefits in having all franchisees motivated and wanting to be in the system

The position of franchise resales manager/team member should not be confused with a franchise manager who is incentivized to sell new franchises. By the same token, managing resales and transfers should somehow have incentives in addition to the transfer fees for the team members that have to support and handle them.

Franchisors should be best positioned to provide clear guidelines to the outgoing franchisees on how to evaluate and market their franchise business for sale. Unfortunately in many networks exiting franchisees are left to find a broker to help them market, price and handle the sale for them. Would it not be better if this were a service that franchisors network offered their franchisees?

Knowing the franchisor is there to support its outgoing franchisees would be a big incentive for new franchisees to know that not only are they taking a wage they are building up an asset for future date. By buying a franchise, they have bought a business not a job!

Johnny Sellyn 

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