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Franchisor Exit Strategy – Part 1: Sell to a Competitor

FINN BLOG

Franchisor Exit Strategy – Part 1: Sell to a Competitor

 


Franchising is a unique marketplace. We’re a pretty small community. Most franchisors are still owned by the founders – but what happens when a Franchisor wants to exit their business – what is a Franchisor Exit Strategy?

Every franchisor has competitors in some way. Maybe your competitor is another franchise brand, or it’s an independent. One of the options to exit involves selling your franchise to either of these so-called ‘rivals’. So, how could this all play out?

Franchisor Exit Strategy

Why Would A Competitor Buy Your Franchise Brand?

There are a few reasons:

  • It gives them more market control.
  • It’s a way of expanding their revenue and distribution.
  • It removes a competitor that could be a threat to their future.
  • They can learn some of your secrets and apply them across their own business.
  • They might be able to have some significant increase in their buying power.
  • You might have distribution in a geographic area that doesn’t have room for two.

Economies of Scale:

  • When the business model is similar, lots of functions can be combined.
  • Head office rental
  • Product buying teams
  • Operational support teams
  • Accounting and admin support people
  • Marketing support

What to be careful of:

Most franchisors will want to avoid ‘rocking the boat,’ which usually means minimal hassles with franchisees, head office staff, and cash flow into the brand.

This is where things need to often be managed under the radar. This is where you need the unique small team that not only has experience as a franchisor and a franchisee but has also sold a lot of businesses.

How Can Finn Franchise Brokers Help You?

The most important role that Finn Brokers take on as franchise consultants is to provide a Franchisor Exit Strategy. This strategy involves the careful selection of which options are the best for you. Finn Brokers will identify your target buyers. This will involve a shortlist of competitors, and also other strategic buyers, private equity groups, overseas brands, and investors. Finn Brokers will assist you in the process of reaching out to target buyers (often confidentially) then offering, negotiating, and helping to sell your franchising rights to interested parties so that ultimately, you are able to meet your target business goals.