Five Secrets To Selling A Franchise
- 1. Know that your prospect is already looking at your brand. ...
- 2. Don't try to sell to buyers; educate them. ...
- 3. Focus on unit-level economics. ...
- 4. Put your validators front and center. ...
- 5. Tailor your content to stay top of mind. ...
Full Answer
What are the benefits of owning a franchise?
Perks of owning a franchise
- Brand name. Franchises are popular in the United States because consumers come back to what they know and love. ...
- Tried and true system. When you open a franchise, you know you’re benefiting from the business method that skyrocketed the company.
- Low cost of goods. ...
- Support team. ...
- Financing. ...
Can I make money with a franchise?
When it comes to making money franchising, and if your franchise program is built right (hint, hint), you may have additional sources of revenue built into your franchise program.
What does it mean to buy into a franchise?
Buying a franchise means buying into the opportunity to participate in the brand. This upfront cost is in addition to any of the expenses associated with starting a business, such as purchasing a location, setting up contracts with suppliers, obtaining permits and insurance, hiring a staff, and so on. You have to pay to play.
How do you sell a franchise?
Typical Restrictions on Franchise Sales Include:
- The purchaser must meet the franchisor’s then-current qualifications for new franchisees
- The purchaser must sign the franchisor’s then-current form of franchise agreement
- The franchisee must cure all defaults (including payment defaults) under the franchise agreement prior to the sale
How do you sell a franchise?
Selling Your Franchise in Three Simple StepsStep 1: Prepare Your Franchise for Sale. Start by contacting your franchisor. ... Step 2: Market Your Franchise for Sale. Most business brokers use online portals and their own proprietary databases to market businesses for sale. ... Step 3 – Negotiate and Close the Deal.
How do you value an existing franchise?
Franchises are often valued based on a multiple of revenue, cash flow, or earnings before interest, taxes, depreciation, and amortization (EBITDA). As the name implies, the EBITDA method adds back some expenses to the earnings total, and a franchise can be valued at 4 to 5 times EBITDA.
How do I sell my first franchise?
Here are some effective ways to sell your first franchise:Talk to Customers.Get Signage and Physical Presentations.Focus on Social media.Offer incentives to your employees.Sell Opportunity by Being Early.
How do you franchise a concept?
A business owner can start a franchise by filing a Franchise Disclosure Document, which allows the company to sell the concept to qualified entrepreneurs who then replicate the established business model and follow the guidelines in exchange for the payment of fees and royalties to the franchisor.
Where do I list my franchise for sale?
Whether you are ready to sell or you are just considering it, here are our top tips for selling an existing franchise:List your franchise for sale on FranchiseFlippers.com. ... List your franchise on other online business listing websites. ... Reach out to fellow franchise owners in your franchise system personally.More items...
How do you negotiate a franchise?
8 Things to Consider When Negotiating a Franchise AgreementFirst of all, never sign any agreement without negotiating. ... Negotiate extensions. ... Your right to obtain waivers in the event of the franchisor's company-wide decisions. ... Make sure that all fees are disclosed. ... Have as few requested changes as possible.More items...•
Can a franchise be sold?
Most franchise agreements contain strict limitations on the franchisee's ability to sell their franchised business. Fundamentally this makes sense, as the franchisor needs to make sure that it has final say over who gets to do business under its name and using its proprietary system and methodologies.
How long does it take to sell a franchise?
The average franchise sales cycle is 12 to 20 weeks On average, the total time to close a franchise sale can be up to 20 weeks.
How do you get people to buy a franchise?
Here are the best 10 tips that should help you get started when you first market your franchise business:Build Your Online Presence Online.Work Social Media.Redo Your Marketing Materials.Be Content Savvy.Understand the Conversion.Redo your Franchise Logo.Understand How Critical a Franchisee Is.Leverage Your Connections.More items...•
What are the 4 types of franchising?
The four types of franchise business you can invest inJob or operator franchise. These owner operator franchises are usually home based, which keeps overheads down to a minimum. ... Management franchise. ... Retail and fast food franchises. ... Investment franchise.
Can owning a franchise make you rich?
The bottom line is that while a franchise can make you independently wealthy, it isn't a guarantee. Choosing the right business in the right industry, and going in with preexisting entrepreneurial experience and/or existing wealth can help, but your income-generating potential may still be somewhat limited.
How do franchise owners get paid?
How do franchise owners get paid? Franchise owners can pay themselves a salary or depending on their business entity, they may be able to take a draw from their accumulated equity.
How much money do you make owning a franchise?
According to a survey done by Franchise Business Review involving 28,500 franchise owners, the average pre-tax annual income of franchise owners is about 80,000 dollars.
What is the most profitable franchise?
Most Profitable FranchisesDunkin'7-Eleven.Planet Fitness.JAN-PRO.Taco Bell.Orangetheory Fitness.Great Clips.Mac Tools.More items...•
How much does a McDonald's franchise cost?
McDonald's franchisee applicants must have a minimum of $500,000 available in liquid assets and pay a $45,000 franchise fee. Those looking to launch a new McDonald's franchise can expect to shell out between $1,314,500 and $2,306,500. Existing franchise prices can cost upwards of $1 million or more.
How much do Dunkin Donuts franchise owners make?
Average Sales / Revenue per Year The average Dunkin' franchise is getting around $620,000 to $1.3 million in sales per year. This results in the average Dunkin' franchise owner to have an annual salary of around $124,000.
Why should franchise sales be renamed?
I think "franchise sales" should be renamed "franchise development" across the board because buyers want to feel like they're in charge of the process . Yes, at some point, you as the franchisor will have the ability to decide whether a given prospect is a good fit for your brand, but within that candidate's due diligence process, educate them and give them scaffolding to help facilitate their decision to buy in. As the franchise brand, it's your job to educate buyers on the value of your product, your vision for the future, the reason behind the investment level and how much franchisees can potentially make. Along with all of these, your most important role is to celebrate those who validate the brand. By doing so, you can give all the answers to your prospects, and they'll likely convince themselves why they want to join your franchise system.
Is it better to sell a franchise or leverage?
In my experience, there's no better secret to selling a franchise than to leverage your own franchisees. When existing franchisees make money, prospective franchisees will want to join your brand. There are certainly some things you can do to create the right brand perceptions, like implementing a proper digital strategy and an effective local store marketing plan and even, operationally, creating the perception of sky-high demand. That said, don't forget: If your franchisees aren't making money, then there are no more secrets to selling a franchise, as you're already dead in the water.
What is franchise concept?
Getty. All franchises originate from a concept, which is essentially an idea, which forms a nucleus or core around which other business activities are framed. Success primarily depends on how well planned and secure this core is. Making this core as unique as possible is the most creative and innovative tasks for an entrepreneur.
What is franchising essential?
An essential component of franchising is the capability to replicate, which requires effective training.
What is the replication capability of a franchise?
The replication capability of a franchise reflects on the quality of its product or services. The impact on the quality of the concept components due to mass scale production of products or wider outreach of services, demands careful consideration.
Why do franchises glocalize?
Desired physical, material or human resources for a concept should be readily available at any location the franchise is planned to reach. This is one of the reasons why franchises try to glocalize when they expand globally. It is not only the availability but also the desired quantity.
What components are not readily available in franchise restaurants?
Hardware components, ingredients, skilled workers, equipment and required components may not be easily available. For some franchise restaurants, it was difficult to secure required quality vegetables, pepperoni, or coffee beans at various locations.
How does compromise affect franchise?
Any compromise may affect the brand image of the entire franchise system. Impact of environmental conditions or lack of required resources can also affect concept authenticity. Maintenance of quality should cover the entire process from origination to consumption or use. Serviceability.
What is the final attribute of a successful concept?
Final attribute of a successful concept is its potential to be adaptable. The dynamic nature and constant technological changes demand adaptability. The concept should be able to withstand the changes in consumer habits. Enough built-in flexibility of a concept is definitely a desirable attribute. Franchises that can modify and adapt to circumstances without changing the basic core are the most successful ones.
How to keep your franchisor informed?
It's important to keep your franchisor informed about your plans to sell the franchise at the very beginning of the sales process. Many franchisors have rules regulating franchise sales. These rules should have been listed in the franchise contract you signed when you bought the franchise. Go back over those rules with the franchisor to make sure everyone is on the same page.
How to sell a franchise?
You also need to prepare to sell your franchise before you actually place it on the market. Included among the preparations you will need to do are establishing the value of the franchise, setting a price, compiling financial information, notifying key employees (if necessary), and putting together a sales packet.
How to promote a franchise?
Make certain to abundantly promote your franchise through every possible avenue. If you need help with this, you might even want to consider listing it with an agent. Also take some time to practice your sales pitch. Recruit a few friends to critique your pitch before you "go live" with actual buyers.
Do you have to prepare for a franchise sale?
Be aware that some franchise sales require more upfront preparation than others. Again, talk to your franchisor for specific advice about what you may need to do for the sale of your franchise.
Can a franchisor sell a franchise?
Your franchisor might also be able to offer assistance in selling your franchise. Sometimes franchisors are aware of potential buyers who are interested in a specific territory and are looking for a relatively "turnkey" operation.
Is it necessary to know the market before you list your franchise?
It is absolutely imperative to have a basic understanding of the market before you list your franchise. How much have similar operations sold for recently? Is the market hot or cold right now? What type of person is most likely to buy a franchise like yours?
Evaluation and Application Process
- Investigate all aspects of the franchising field as they relate to your enterprise. Visit trade shows and talk with people who have been on both ends of a franchise deal. Consult with your attorney, accountant, business manager and/or anyone else you can count on for opinions about the viability of duplicating and licensing your business concept.
Goals / Budget
Five Good Reasons
What to Do with Leads? How to Handle A Franchise Lead