Avoid pitfalls, take your time.
Quite a lot of our time at Franchise Resales is spent in one to one discussions with franchisees who are seeking advice about optimising the value of their businesses and planning their exit from their particular franchised network. The vast majority of these are seeking to realise the value of their investment in their franchise to be able to retire or occasionally a franchisee will be looking to sell to move on and acquire an alternate franchise.
Sometimes however the call comes from a franchisee who just doesn’t like the franchise they have bought or has been offered an employed position by an external company and who wishes to return to that world. In each of these situations it is very difficult to be able to offer a cost efficient solution to the franchisee concerned. This is because the businesses involved have usually either hardly got off the ground or have slipped in terms of financial performance as the owners focus has moved away from developing the franchise to pursue other interests.
In each case, a discussion with the franchisee who is wishing to sell, usually indicates that they had not spent very much time investigating the world of franchising. They may have not understood what it means to be a franchisee and had not established whether the particular brand under investigation or franchise life in general actually suited them. Most franchisors that are members of the British Franchise Association (bfa) adhere to the bfa code of ethical conduct and spend considerable time in discussion with franchisees prior to allowing them to sign up and join their particular franchised network. They can however only do so much. It is up to a franchisee who is looking for a business to apply a bit of due diligence to their investigations themselves.
Owning a franchise is not like having a job – there is usually very little or no income available at the end of the month if sales are not generated. The success of a franchisees business depends almost entirely on the effort and energy employed by that franchisee. It may be that some leads and enquiries are generated through the franchisors central operation but usually franchisees are expected to generate their own sales turnover. So one of the skills or personality traits that every successful franchisee has to develop is the ability to get on with and interact with other people in a business context. Some of the best sales people are likeable individuals and most folk want to do business with people they like so this element of a potential franchisees skill set is crucial.
One place to find out what it is like to be a franchisee is by attending one of the “Real Franchise Stories” panel discussions at the franchise exhibitions held in Manchester (June) , London (September & March) and Birmingham (October & February). Here you will be able to ask questions of current franchisees who have made their time available to help those considering buying into a franchise, hearing how it was and is for them being franchisees.
There is also the situation where a franchisee doesn’t like the ‘day job’ of the business they have entered. It is difficult to be a motivated and enthusiastic driver of a business that you just don’t like doing. Sometimes this has been because there wasn’t enough research carried out or discussions held with existing franchisees before the commitment to join was made. Our advice in Franchise Resales is always to take that extra bit of time and speak to as many existing franchisees as possible within the brand you are investigating before making a decision to join.
A good way of seeing whether a particular business is for you is to look at a franchise resale – to buy an existing franchise from its current owner rather than stepping into the unknown with a greenfield location. A franchise resale has clients and business from day one; it has everything in place for a new owner to take over and develop further and most importantly the brand is already known in the local marketplace. In other words you know what you are getting in to; the evidence is there in terms of trading history and business performance.
Franchise resales are available in most business sectors and to see a list of those currently available, click on our Buy a Franchise tab because as indicated at the start of this article many successful franchisees are now planning retirement so there is a growing number of franchise resales opportunities coming to market.