Franchising is one of the most successful business models in the United States and can be quite lucrative for both franchisors and franchisees. However, operating a franchise requires a solid sales strategy, adequate capital, managerial talent, legal protections, and an appropriate exit strategy.

Whether you are a franchisor looking to grow your franchise brand, or a franchisee preparing to sell, it is important to understand the franchise sales process and the challenges of selling a franchised business. Learn more about how to sell a franchise with this guide for franchisors and franchisees.

FOR FRANCHISORS

Understanding Your Franchise Opportunity

A franchise provides entrepreneurs with the unique opportunity to purchase an established business with existing branding and processes in place. This concept can be appealing to a prospective buyer; however, reaching a deal takes considerable work and patience.

Start by identifying the unique aspects of your franchise opportunity. Is there a demand for your products or services in your community? Is your product evergreen or seasonal? Do your products or services generate repeat business? Also, consider the level of competition, locally, regionally, and nationally. Are the products you sell easily available online?  Are there many competing companies in the area?

Next, determine the target audience for your franchise opportunity. Entrepreneurs are an obvious choice. According to a Franchise Motivation Survey Report, 45 percent of new franchisees had considered starting their own business. Over the last decade, women have also played a key role in franchise ownership. Your target audience could also include past employees, millennials, or Generation X.

Finally, you’ll want to develop a compelling pitch. Include what makes your brand unique and why someone would choose your brand over your competitors. Discuss the effectiveness of your recruitment marketing and your comprehensive strategy for following up on inquiries.

Developing Your Sales Strategy

Having an effective sales strategy is critical to selling your franchise offering in a way that attracts buyers. There are many channels that franchisors can utilize to promote their franchise opportunity, such as the following:

• Social Media – Through social media platforms like Facebook and LinkedIn, a franchise owner can share information about their brand and share opportunities that may draw in a potential buyer.
• Trade Shows and Events – Trade shows and events provide professionals with an environment in which they can have unique conversations about the franchise industry and the opportunities it provides.
• Referrals – Referrals offer an excellent way to get the word out about a franchise business opportunity.
• Email Marketing – Email marketing is an inexpensive tool that any franchise seller can effectively use to find a qualified buyer using elements like engaging creation, an alluring subject line, and a compelling call-to-action.
• SEO and SEM – Search engine optimization (SEO) and search engine marketing (SEM) can help market a franchise opportunity. While SEO focuses on the use of free, organic traffic, SEM uses paid advertising.
• Franchise Portals – A well-developed franchise portal can provide franchisors with leads for prospective franchisees.

Franchisors can also develop marketing materials that showcase the benefits of their franchise opportunity. Consider developing the following marketing materials:

• Franchise brochures
• Franchise websites
• Video content
• Testimonials and case studies
• Press releases
• Social media content

Qualifying and Selecting Franchisees

Finding the right franchisee is one of the most important decisions a franchisor will need to make and requires a strict screening process. Start by identifying what qualities and characteristics are important for franchisees to possess in your industry. You’ll then need to develop a thorough screening process to determine if each prospective franchisee that you discover meets your requirements.

Create a system for selecting franchisees that are a good fit for your business. Once you have a clear profile of what you expect in a prospective franchisee, you can start the interview process. Ask important questions, such as “What are your objectives and goals?” Try to figure out whether the individual will follow your existing franchise system and if the person is a team player.

Supporting Your Franchisees

The biggest advantage of becoming a new franchisee is the opportunity to get involved with an established brand with an experienced business owner. It’s normal for a new franchisee to expect a certain level of support from a franchisor to ensure that the individual business succeeds. There are many ways that a franchisor can support their franchisees, such as:

• Training – Franchisors often provide new franchisees with a multi-week training course, which could combine in-store training with classroom instruction.
• Marketing Support – In many franchising systems, franchisees contribute to a fund that goes towards large-scale marketing efforts. 
• Operational Support – New franchisees are often provided with a detailed operations manual that discusses protocols, processes, staffing, standards, and responsibilities. 
• Financial Support – Many franchisors require franchisees to purchase supplies from approved vendors that offer pre-negotiated pricing.
• Community Support – A supportive franchising system involves creating a community of franchisees who can support one another and share best practices.

Challenges to Selling a Franchise Opportunity

It’s common for franchisors to experience challenges when selling a franchise opportunity. Finding qualified franchisees is one of the biggest hurdles of franchise development as franchisors don’t want to waste resources on individuals who are not right for the job.

Marketing the franchise opportunity can also prove difficult. There may be a lack of marketing synergy between the brand and its outlets or partner network. There may also be difficulties collaborating with various locations and meeting the unique needs of each outlet or partner. Inconsistent brand messaging can also cause problems.

Other challenges may also arise when selling a franchise opportunity, such as difficulties with managing the sales process, developing a support and training system, and meeting critical legal and regulatory compliance.

How Franchise Genesis Can Help

Franchise Genesis has helped countless businesses start and grow a franchise. Our team of knowledgeable consultants can assist with all elements of the sales process, such as franchise development, franchise marketing, lead generation, franchise sales, and franchise training and support.

FOR FRANCHISEES

Preparing to Sell

When selling a franchise, a franchisee must adhere to the terms and conditions of the franchise agreement. A franchise sale can be complex; therefore, the selling franchisee must do their due diligence to ensure that they are taking all necessary steps to properly conduct a franchise resale.

First, the franchisee should identify the reason for selling the franchise, even if the reason is to simply cash out. It is also important to prepare any financial statements and other important documents for potential buyers. For example, a franchise disclosure document is typically required to provide the buyer with a clear picture of how the business relationship between the franchisor and the franchisee will be conducted.

Finally, the value or sale price of the franchise will need to be determined. Franchises can be valued in different ways, such as by cash flow, revenue, earnings before interest, depreciation, taxes, and amortization.

Finding Buyers

Finding a potential franchisee to take over the business is no easy feat. However, there are tools available to franchisees looking to sell. Franchise-specific websites and related resources can prove beneficial in the search for qualified buyers. You can also seek referrals from other franchisees. If problems finding qualified buyers persist, franchisees can also engage with the franchisor for advice and support.

Navigating the Sales Process

The transition from an existing franchisee to a buyer can sometimes be rocky. However, you can make this process go more smoothly by understanding and preparing for the sales process.

Develop a transition plan to help the new franchisee confidently take over the business. Ideally, you want to provide support and training to the new franchisee in the early stages. It’s also imperative to ensure compliance with existing franchise regulations and policies.

There are also other things to work out during the sales process, such as the initial franchise fee, establishing ongoing royalties to the franchisor, and how intellectual property will be handled.

Contact Franchise Genesis for a Free Consultation

Successfully selling a franchise requires a series of steps, such as determining the value of the franchise, preparing documents, finding buyers, navigating the sales process, and overcoming common sales challenges. Working with franchise experts is an excellent way to streamline these steps and ensure a satisfactory result.

Franchise Genesis is a full-service franchise consulting company with years of experience helping franchisors and franchisees grow and sell their businesses. To learn how Franchise Genesis can help with selling your franchise opportunity, call 980-261-5999 to schedule a free consultation.