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In Business for Yourself.. and Totally by Yourself !

The much used statement, which screams the benefit of buying a franchise: “In Business For Yourself BUT Not By Yourself,” seems not to apply when it comes to exiting in some franchise networks!

It has been surprising and quite disappointing to learn how some franchise companies view their ‘role’ when it comes to assisting or advising their exiting franchisees. After all buying a franchise is not necessarily for life! Almost all franchisees will at some point want to sell their franchise for whatever reason. Whether it is to reap the benefit of many years hard work building the business, whether it’s time to retire or relocate, health issues or simply because they do not wish to work at the business any longer.

Over the past couple of years, I’ve come in contact with a variety of franchise companies. Most I found to have a professional network with dedicated personnel handling all issues about operating franchises! However when it comes to the one area of the franchise lifecycle, resales or transfers; it was very clear that there was a vast difference between franchisors that did care and others that did NOT and were totally dismissive about the topic of resales!

Networks that handle or assist with resales within their organization well, almost always have dedicated staff who are assigned the responsibility. They know when the franchisee is ready to move on and they do everything in their power to make a good transition happen. They have in house systems they follow and all their franchisees are grateful knowing that the promise made to them by their franchisor when they first bought: “In Business for yourself, But not by yourself” was clearly meant and adhered to.

This is how Brian Savage CFE, Business Development Manager at Baskin-Robbins explains the benefits of their franchisor managed resales program: "Franchise resales are just part of the landscape. If a franchisee is interested in selling a shop, we are happy to assist where we can. Working with franchisees in the transfer process can provide a benefit that many franchisors seem to miss out on. By embracing the process, you have an opportunity assist the seller and influence the transaction in a positive way. It's amazing to see what a fresh set of eyes and some renewed energy can bring to an existing asset.”

In contrast, I was very dismayed recently when I was told by franchise staff of a major chain, that they did NOTHING to help their franchisees exit! “We sell lots of franchises and have done so for many years.” The young lady representative told me: “We don’t care what the franchisees do when they want to sell their franchise, nothing to do with us!” I was so shocked by that statement that I had no response. I do wonder if the incoming franchisees of that brand would have been so happy to buy a franchise knowing that when it came to selling and capitalizing on their hard work and investment, their franchisor simply would not care.

Imagine you are a franchise owner five years into your agreement. Suddenly, there is a lifestyle change that makes the business no longer attractive. You need to sell and discover that your franchisor won't lift a finger to help. How is it possible for the franchisee to stay enthused and continue in business and try to cooperate with the franchisor? Disgruntled franchisees are not good for anyone in the system! It only makes good business sense to help them.

The guiding principles of franchising addresses the concept of franchisees “monetizing equity” developed in their own businesses. Equity can only be monetized when the franchisee sells their business. If this principle is to be believed in and supported then it should be incumbent on Franchisors to cooperate in the process. Support from franchisors should not stop when the franchisee wants to exit. In fact, franchisors who promote their support and have a well managed exit strategy should be more appealing to the new incoming franchisees.

Many times I’ve heard from franchisors that they do not wish to promote the fact that they have resales in the system as it may be viewed negatively. In reality, some refer to resales in their system as ‘dirty laundry’. Why is that? Surely it can be a positive when a franchisee sells their franchise for a profit as in the case of Rich and Sonja Heaton, Signarama franchisees who turned their $150,000 investment into a $2M sale after 12 years. Not only does it help incoming franchisees know that one day they can recoup all their hard work and investment, it also promotes the franchise system as a good investment!

If franchisors do not help their franchisees exit, they will definitely end up having closures. This is worse for the brand and other franchisees in the system.

Is the simple answer more education and awareness? I am hopeful that soon all franchisors will see the true benefit in providing their support to their franchisees in this very crucial stage of their franchise lifecycle. After all it follows their original promise to them, ‘NOT BY YOURSELF!’

Yvette Sellyn

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