Our Franchise Consultant Gives You 9 Must Read Tips For Selling Your Franchise
Got a cool concept and a system that’s running like a well-oiled machine? Thinking of taking it to the next level and becoming a franchisor? To help get you started right, we turned to franchise consultant Peter Casey of Capital Franchise Group for his expert insights. Before you sell your first franchise, check his list of tips:
- Be willing to make several face-to-face visits. The person buying into your franchise is buying the relationship and your personal experience. Since yours is not a major franchise system, it’s more important to focus on the extra attention and the support that you’re going to provide.
- Offer a bigger territory. People buying an unestablished franchise system are going to be naturally reluctant. You need to give a lot more than you will for your second, third, and fourth deal. Their commitment to you is based on trust; prove your commitment to them by sweetening the pot.
- Be patient. The process will take a lot longer in the beginning because people are going to want to spend more time and work through more issues.
- Don’t break the law. Get familiar with the rules that are in place, especially regarding earnings claims. If you think selling your first franchise is hard, it’s incredibly hard selling your second or third when the first one sued you.
- Have appropriate partners lined up. For example, a good commercial realtor who is well-versed with your model and willing to assist in the early stages can make franchisees feel good about you.
- Have good marketing materials. Know who your target market is and what they’re looking for in a franchise opportunity. Advertise on different mediums—not just print and not just the Web.
- Consider hiring a franchise broker. Someone who has closed franchise deals before can be a big help. It’s tough to run the store and be a full-time salesperson.
- Hold the bar high. You’ll be very eager to take a check from anyone you can, but as a new franchisor you need to find somebody who’s had business experience.
- Keep it local. Thinking you can support somebody who is in a totally different state at this early stage is unrealistic. Avoid the long distance relationship and start close to your home base.
The Necessity to Revamp Franchise Operations and Systems
But, once the original operating system is established, it must be refined and tweaked as changes take place in its industry and within the company. An ongoing challenge for every business, not only franchise companies, is how to improve their operating systems in order to better manage results.
The Importance of Setting Clear Expectations
So my recommendation is as follows: As early in the relationship as possible, invest the time necessary to clearly describe the shared expectations for how you will work with your customers and, and how you will work with your employees. If you do this well, everyone will be on the same page and when you deliver something a little bit better than they expect, the will see you as someone they trust, like and want to be loyal to – a strong driver of success for any business.
Common Mistakes Made By the Franchisor Buyer During the Due Diligence Investigation
Franchise merger and acquisition talks always start with the best of intentions. After all, a well-executed franchise system merger can lead to enhanced scale (for increased buying power and leverage over suppliers), reduction of overhead and operating costs (through elimination of duplicate staff, departments, and locations), and increased revenue (through cross-selling of products or services, optimization of distribution channels, and bolstered brand recognition and standing in the eyes of prospective franchisees).