Buying a Franchise? Know Your Exit Strategy
Launching into a new franchise business can be an exhilarating experience. For good reason, most new franchise owners find themselves focused on getting their businesses on solid ground. But purchasing a franchise isn’t only about the beginning. A strong business plan must also include a solid exit strategy.
Franchisees may eventually want to sell their business for many reasons, including retirement, personal reasons, or to pursue new opportunities. While it may be hard to imagine the end of the road of franchise ownership when you’re standing at the starting line, it’s important to be prepared with an exit plan whether the plan is ever actually used or not.
Owning a franchise isn’t like having a job that you can simply leave or retire from. For this reason, understanding the franchise business’s exit ramp options may have a significant impact on your choice. According to Eileen Gunn of Entrepreneur.com, “it’s never too soon to think about how and when you’ll get out of your franchise.” Or, for that matter, what kind of approvals, permissions, or transition requirements you will need to satisfy with your franchisor once you are ready to put your exit strategy into action. Knowing these details before you purchase a franchise can help you make the right selection for your situation.
For many franchisees there are a range of different options when it comes to an exit strategy. Among the most common are passing the franchise location on to heirs or family at retirement, or selling it to a new owner or an existing franchisee within the franchise system.
According to Franchising.com, new franchisees often start their business with the intent of eventually passing it on to their heirs. With the right skill sets and the proper training, this type of exit strategy can work very well. If creating a legacy is one of your goals in purchasing a franchise, it’s best to consider whether your heirs are willing and able to maintain the business you choose right from the start.
Selling a franchise is another viable exit strategy, especially if your goal is to change industries, or take on a new challenge. There are often many potential buyers for a successful franchise, including key employees, or other franchisees.
No matter which option you prefer, the most important thing is to work with your franchisor to understand how the exit process works, what franchisor approvals are required to sell, and any other requirements the franchisor may have, such as equipment upgrades. The good news is that you have multiple exit options, and through advanced planning and collaboration with your franchisor, you can successfully manage your franchise experience from the beginning to end.