How to Find The Best Buyer for Your Franchise Resale?
If you’re already a franchise owner, you might come to a point where you no longer wish to run the business anymore. When the time comes to move on it means you’re about to venture into the market of franchise resales. But how do you go about finding a buyer for your business? Here are the major points to be aware of.
Get a Business Valuation
It would be unwise to sell anything without knowing how much it’s worth. Before you put up your franchise for sale, hire a third party company to complete an accurate business valuation. The process is complicated as it takes into consideration many factors beyond just cash flow. Assets, economic conditions, and your staff are also brought into the equation among other things. This is why you need to hire an expert. Your business valuation should be completed by a certified accountant. You will of course have to pay a fee, but it’s money well spent.
Draft a Prospectus of Sale
The next step is to write a detailed document outlining everything a potential buyer might need to know in order to make a sound decision. A prospectus of sale is a disclosure document that includes complete information on financials, assets, the state and nature of the business, biographies on the directors or officers in the company, supplier networks, inventory levels, and everything else that concerns the daily function of the business. You can do this yourself, but the document will be quite long an exhaustive, so you might want to consult a lawyer to ensure accuracy.
Find a Business Broker
Once you’ve taken care of the two above things, it’s time to create an ad and get your prospectus in the hands of potential buyers. For this, you need a business broker. A good broker can go a long way in finding buyers for your franchise resale and ensure you get the best price possible. Look for a broker who deals with businesses similar to yours. Your broker should also be well connected because selling a business with little or no network is extremely difficult. The easiest way to find a broker is through a referral. Another option is to ask your accountant or lawyer if they know anyone.
Screen Your Applicants
When you have potential buyers lined up, you’ll need to interview and qualify them. Think of yourself as a hiring manager looking for new recruits and only the best will do. Perform background checks on your applicants by looking into their credit history and criminal records. Buyers with a proven track record in small business are ideal. In the interview you should ask about how they plan on financing the company. You might also ask why they are interested in buying the franchise, and what their intentions might be if they become the new owner. An owner who is passionate about the business is more likely to excel.