The Best Option to Sell a Franchise Business


The Best Option to Sell a Franchise Business

More than 10,000 franchise businesses change hands every year in Australia, approximately 15% of the total franchises in the country. One of the primary questions that comes up in these situations is how to go about the sale. Should the franchisee ask the franchisor for help with the sale or should they sell it on their own? Many will ask former franchisees that have sold their own franchises, ask their accountants for advice, contact the franchisor to help them sell, or hire a business broker. All of these have merit, and when considering these options, it is important to understand the roles and interests of all parties involved so you can know who has your best interest in mind and why.

The franchisor will always be involved because there will always be franchisor requirements that need to be met in any sale of a franchise business. Two reasons that franchisor involvement is advantageous is because of their obvious knowledge about the business and their ability to sell the positives of it to potential buyers, but there are also very conflicting interests when the franchisor is responsible for the sale of existing franchises.

The goal of the franchisor’s recruitment team is to grow the network and bring new franchise locations into the fold. Meaning, they view what could be potential buyers of your business as potential buyers for a new franchise, and with growth being their priority, which business do you think they’ll push that buyer towards? Additionally, the franchisor has no financial incentive to help the franchisee sell the existing franchise, whereas a business broker has every incentive to help them sell because they only earn a commission once a business is sold.

Another important factor which is sometimes overlooked is licensing. Just as you need a license to operate a vehicle or sell liquor, you also need a license to legally oversee and be involved with the sale of a business. Most franchisors don’t have such a license. If the sale of the franchise is managed by an unlicensed person, the franchisee could end up in significant legal troubles if things go badly. Operating outside of legal boundaries, even if unknowingly, is always a very bad idea.

So when considering the above information, the best option to sell a franchise business using a legally qualified broker, who can give you the best of all worlds. Your broker will work closely with the franchisor, as well as supply you with numerous leads consisting of people who are already looking to purchase a franchise business. A broker always has your best interest in mind and will generally make a sale happens much faster. They focus on turning out the best deal for everyone involved – the seller, the buyer, and the franchisor.