Your Franchise Resale: A Step-by-Step Guide

Ready to transition to the next chapter of your life? Whether you’re looking to capitalize on your success or seeking a fresh start, this guide will help you confidently present your opportunity to potential buyers.


Part 1: Knowing Your Franchise & Identifying Your “Why”

  • Understand the Model: Refresh your knowledge of the franchise system, including your brand’s strengths, target market, and ongoing support structure.
  • Gather Documentation: Compile financial statements, marketing materials, and any recognition your franchise has received.
  • Identify & Address Your “Why”: Be clear on your motivations for selling. This will help you communicate your decision to potential buyers and frame it positively. Consider reasons like:
    • Retirement: Ready to enjoy the next stage of life.
    • Health Concerns: Need to slow down and take care of your health.
    • Lifestyle Change: Seeking a different geographic location or a schedule that allows for more flexibility.
    • Family Considerations: Changes in family dynamics or the need to prioritize family needs.
    • Skillset Mismatch: Recognizing that the franchise might better fit someone with a different skill set than your own.
    • Undercapitalization: Recognizing that the business possesses strong growth potential but lacks the necessary capital to fully realize its expansion opportunities.
    • New Opportunity: Pursuing a different business venture or a career change.

Part 2: Understanding Financials & Valuation

  • Understand Your Financials: A clear understanding of your business finances is crucial for achieving the best sale price. Calculating your Seller’s Discretionary Earnings (SDE) is essential, as it allows you to demonstrate the true earning potential of your business, leading to a potentially higher valuation. Analyze your current financial position, seek ways to enhance your performance, and don’t wait! The sooner you understand your SDE, the better prepared you’ll be for a successful sale. Download this Excel worksheet to calculate your business’s SDE.
  • Valuation Tools and Insights: BizBuySell offers a valuable toolbox for business owners curious about their franchise’s worth. Their free BizWorth Calculator provides a quick and easy estimate, while the in-depth Business Valuation Report leverages a massive dataset for market insights. You may also want to consider hiring a professional valuation specialist to assess the value of your business. Their expertise can account for your franchise’s unique characteristics, potentially leading to a more precise valuation.
  • Bridging the Gap: Many aspiring entrepreneurs dream of owning a business, but turning that dream into reality usually requires financing. Traditional bank loans, while familiar, can be a tough hurdle due to stricter credit score requirements and shorter repayment terms. SBA-guaranteed loans offer an alternative, but they come with challenges. The current interest rates, ranging from 13.5% to 16.5% as of June 2024, can significantly impact a business’s bottom line. And the stringent profitability requirements can shut out buyers of businesses that haven’t yet reached their full earning potential. Enter seller financing, an established solution offering greater flexibility for buyers and sellers. By offering financing options or adjusting the asking price to make loan payments more affordable, sellers can attract a wider pool of qualified buyers and position each party to achieve the desired outcome.

Part 3: Preparing a Presentation

  • Prepare a Selling Memo: Summarize key information for potential buyers, highlighting the opportunity and your asking price. Aim for 1-2 pages to pique initial interest. Use clear formatting and proofread carefully for a professional presentation. Here is an example of an owner’s Selling Memorandum to download as a Word document.
  • Prepare a Sales Pitch: Craft a concise presentation that outlines the franchise opportunity, your location’s potential, the ideal buyer profile, and your reasons for selling. Highlight your potential by showcasing your established customer base, existing infrastructure, support from the franchise system, and any recent growth or improvements you’ve made.
  • Practice Makes Perfect: Rehearse your presentation, focusing on clarity, enthusiasm, and anticipating potential buyer concerns.

Part 4: Engaging with the Buyer

  • Ask for a Signed NDA: If confidentiality is important, require a Non-Disclosure Agreement.
  • Write Personable Emails: Avoid long paragraphs and confusing words. Proofread your email.
  • Dress for Success: First impressions matter! Dress professionally and create a welcoming environment for the potential buyer.
  • Listen Actively: Respond to the buyer’s questions and tailor your responses to their needs and goals.
  • Be Enthusiastic: Focus on the opportunity. Explain how the franchise’s structure and your existing groundwork can pave the way for success with a new owner.
  • Be Transparent: Be honest about the realities of running the business, including the time commitment, operational challenges, and growth opportunities. Proactively address potential risks.

Part 5: Negotiating and Ownership Transition

  • Negotiate with Confidence: Selling a franchise business can be challenging, but you’re not going it alone. Our comprehensive program provides everything you need for a successful transaction, including widespread advertising of your resale opportunity across multiple platforms to a targeted pool of people looking for a business like yours. Throughout the process, you’ll benefit from the close collaboration of your dedicated Resale Developer as your trusted intermediary. This supports smooth negotiations and contributes to a successful outcome.
  • Closing the Deal: Your Resale Developer handles everything from buyer education to documentation, minimizing stress and maximizing your return. This streamlines the entire process, ensuring a trouble-free transition for you and the new owner. 
  • Look to the Future! Selling your franchise unlocks new opportunities for you to pursue your goals and aspirations.

Tip:

  • Stay Informed: Consider market conditions when setting a price. Factors like a weak economy or high interest rates can affect what buyers are willing or able to pay. Understanding market conditions will help you set a realistic and competitive price.
  • Stay in the Loop! Frequent communication with your Resale Developer can help identify any necessary adjustments to your resale strategy.