How to Sell a Franchise

In the midst of tons of guides to buy a franchise, there are not many guides on how to sell a franchise. This article is one of the guides on how to properly sell a franchise unit.

How this lack of guideline in selling a franchise unit could affect a franchisee? The answer is: A lot.

Firstly, with lack of or wrong guidance, a franchisee could make an uninformed decision regarding the sale of his/her franchise unit. This could lead to misunderstandings later on.

Secondly, selling a franchise without proper preparation can only bring the franchisees in difficult situations, such as future nags from the franchise unit buyer resulted by bias and loopholes in franchise sale agreement (e.g. Unpaid supplier’s bills and any other liabilities that are not laid out to be discussed prior to agreement signing.)

I have found a great franchise sale tips from Gaebler.com that I thought I want to share with you – Here are some tips on how to properly sell your franchise unit:

Keep Your Franchisor Informed
It’s probably the most important of all – You should discuss about your intention in selling your franchise unit to your franchisor. Make sure you revisit what’s written in the franchise agreement regarding franchise unit sales before you discuss with your franchisor to make sure your intention complies with what’s written in it. What’s more, just like in my case, your franchisor could help you sell your franchise unit – a great help for you and a win-win situation for both of you.
Prepare for the Sale
Prepare the paperwork – financial information, legal documents, etc – and don’t forget to determine the asking price and reserve price you have in mind. Also, this is often given lower priority: Notifying your (key) employees regarding the possibility of selling the franchise unit.
Know the Market
Is the niche your franchise serving on positive trends? If not, you might want to pending your intention to sell your franchise unit, as it would yield lower than what’s expected.
Advertise and Practice Your Pitch
Promote your franchise unit sales on various media, including in a franchise directory. Private sale could be a better option in some cases, but public sale is the best way to get potential buyers to spot an opportunity to acquire an established franchise unit. Also, you need to prepare your sales pitch as it is the key in gaining edge in the negotiation.
Provide Assistance To the Buyer
From my experience in non-franchise business sales, this is a great plus point to ace the price negotiation – People tend to accept higher priced deal if assistance is given during the first few months of operation, as people are (silently) checking whether what you pitched during the negotiation holds true in the franchise unit’s day-to-day operations or not.