Supporting you in the next steps of your franchise journey
When it comes to planning ahead for you and your franchise business, we’re the experts. Our experienced team of franchise accountants and business advisors will help you put plans in place so that when the time comes to sell your franchise business, you’re ready and able to get the results you’re hoping for.
Getting ready to sell
Getting your franchise business ready for resale is something you should start thinking about as soon as you purchase your franchise or at the latest, 2 years prior to the end of your franchise agreement. The resale of an established franchise business can often be more attractive to a potential purchaser, and will generally yield a higher sale price, as the current business owner will have past trading figured and accounts to demonstrate the business’ viability.
Whilst the ‘goodwill’ element of the business value generally remains vested with the franchisor, an established business demonstrating profitable trading will also have generated additional goodwill which will be reflected in the sale price. We’d recommend getting your franchise business valued now, you’ll then have a figure in mind, and time to make changes if it’s fallen short of your expectations. We can then present your business for sale in the best possible light to maximise its value.
If you’re thinking about selling a pre-existing franchise business, there are a few things to consider when planning your exit strategy.
You’ll need to take a look at your management structure, with the objective being to demonstrate that you have other management members in place who can operate the business without you. A potential buyer will also value the fact that key people may want to stay on board with the new ownership and this is something you may want to discuss.
Another thing to focus on is maximising your short-term profitability. Consider reducing any additional ‘non-essential’ or one off costs. While these costs can reduce Corporation Tax, it also harms your overall profit and loss account.
There are 3 parties in the negotiations i.e. you, the prospective purchaser and the franchisor so always ensure you keep the franchisor in the loop.
Put your energy into generating additional sales income and ensure that your gross profit is in line with the franchisor’s business model.