Forward planning will ensure the process runs as smoothly as possible, Franchise Resales advises
When you’re ready to sell your franchise, there are several steps you need to take before advertising your business for sale.
1. Get your ducks in a row
Before you start to advertise it for sale, ensure your business is neat and tidy.
Are your accounts in order, contracts in place, leases and agreements organised, etc? When a prospective buyer looks into the nitty-gritty of your business, they want to see that it’s well run and profitable.
Having a neat and tidy business will make it more appealing to a potential buyer.
2. Create a prospectus of sale
In order to sell your business, you’ll need to create a prospectus of sale. This is a document that details everything about it and sells it to a potential buyer.
From here, anyone interested can make a list of any further questions they have that might help them carry out their due diligence. Your prospectus should include:
- An overview of the franchise.
- An overview of your business.
- The asking price.
- Details of any property.
- Details of any staff.
- Information about equipment included in the sale, whether leased or owned.
- Accounts and up-to-date management accounts.
3. Appoint a solicitor
It’s necessary to appoint a solicitor to complete the legal transfer of the business.
Although it’s not always necessary for smaller resales, it’s still advisable to consult a solicitor before completing.
It’s of the utmost importance that you use a solicitor who is familiar with or specialises in franchising. The sale of a franchise is much more complicated than a regular business sale and not using a solicitor with franchise experience could slow down the sale.
4. Franchisor approval
Before you agree a sale with a potential buyer, they will need to be approved by your franchisor.
It’s crucial to seek this approval before you go too far into the process, as it’s no good progressing the sale for your franchisor to reject the buyer at the last minute.
Involving the franchisor from the beginning is the best way to find a candidate who will fit well within the network and who the franchisor approves of.
5. Advertise your business
To generate leads for your business, you will need to advertise it.
Getting it out there is easier than ever, thanks to online and digital platforms. However, these are not free and you’ll need to spend time writing a relevant advert to entice potential buyers.
Once your business begins to generate leads, you’ll need to vet the candidates and eliminate anyone who is not suitable.
6. Non-disclosure agreement
Before you give any candidate the prospectus or disclose sensitive information about your business, you’ll need to ask your potential buyers to sign a non-disclosure agreement.
This is to ensure they will not discuss any information about your business with others outside of the sale.