What Should be a plan before buying Any Franchise!
Selling: The Ideal Exit
Every business owner should plan to exit their business by selling it, and that applies to franchisees as well. This is your opportunity to capitalize on all of the goodwill and clientele you have built up within your community. Building up equity in a community doesn’t happen overnight; typically franchises take three to five years to recuperate the initial investment.
Things to Be Aware of:
If you close shop, you will not get your initial investment back. It’s also very likely you will owe the franchiser a substantial fee to cover royalties and fees that were due during that period you were open. Some franchisees are able to negotiate an exit by:
• Giving the keys back
• Paying owed money
• Releasing the parent company from liability
• Agreeing to not sue the franchiser
• Returning operating manuals and company materials
Other franchise companies have a mandatory sale of the assets back to the parent company at a predetermined valuation method. While better than a straight termination, the best options will leave your family with a larger stake of the initial investment.
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