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The Different Reasons why Business Owners Choose to Sell their Franchise

Martin Castilla            No comments            Apr, 13

Whether your interest lies in selling a franchise or buying a franchise business, you need to fully understand why the sale occurs. The underlying reason or motivation can affect the sale price. When you sell franchise businesses, you need to determine why you want to sell and know how to maximize your return. When you buy, you need to know how to leverage a situation so you can obtain an established business for less.

Some reasons motivate a seller to look for a quick sale that provides an immediate exit. These sellers may sell for a modest price to the first qualified buyer. Other reasons provide for a more leisurely approach to the sale, allowing the owner to take their time considering multiple offers and holding out for an appropriate price. A multitude of reasons exist for a business owner selling their investment.

Fast Sale Reasons

Reasons to sell a franchise fast usually revolve around some type of personal crisis. The owner then tried to find out how to sell a franchise and usually wants a speedy turn around to instantly liquify assets. These reasons include:

  • burn out or exhaustion,
  • a family or personal crisis,
  • the death a business partner or co-owner,
  • the serious illness of a business partner or co-owner,
  • retirement,
  • divorce sometimes requires the parties to liquidate business equity interests,
  • a new business opportunity requiring significant funding,
  • a sudden or unanticipated change in business conditions.

Slow Sales Reasons

Slow sales reasons usually revolve around an anticipated change. The owner may have planned the sale far in advance and can take their time considering offers and negotiating. They often focus as much on who they sell to as for how much. These reasons include:

  • anticipated market changes that would require a greater effort from the owner to make the business succeed,
  • to put money away for future retirement,
  • cashing out for desired major purchases such as a home or dream car,
  • peaked performance or sales,
  • a boom market period,
  • a struggling, but operational business,
  • the entrepreneurial owner wants a new challenge,
  • a buyer with strong interest who makes an offer when the business isn’t for sale.

Baby boomers retiring provides an expansive field of opportunities to buy. As the large population segment moves into retirement, it opens doors for those looking to purchase an already operating franchise. Some retiring owners may use selling a franchise as a method to move into consulting. These experienced entrepreneurs may finance part of the sale price and remain as a business consultant for a specified time period. In these cases, the purchase price usually includes the consulting fees.

Rather than turning to a corporation that will sell franchise opportunities, you can purchase an already operating franchise. This saves you the start-up headaches like finding a suitable business location, buy land and building to the franchise specifications. You obtain a ready-made opportunity that already, hopefully, turns a profit.

Sellers should prioritize their needs with respect to the sale. What aspects matter the most?

  • optimal sale price,
  • final sale deadline,
  • seller involvement post sale,
  • all-cash purchase or seller-financing,
  • client and employee disruption.

Whether buying or selling a franchise, you can maximize your success by determining the reason for the sale. This one key piece of information decides your approach.