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Q.

How important is it for a franchisee to have an exit strategy?

Author: Brain Duckett

answered by Brain Duckett

Chairman of The Franchising Centre

Not just franchisees, every business should have some idea of what their exit strategy is and that includes franchisors - more of which in a moment.For many years The Franchising Centre, when helping our clients with their franchisee recruitment, has been asking candidates about their exit strategy, not necessarily in those terms, but with an open question such as: “What attracts you to this franchise and how do see it helping you with your future plans?” Some may say: “It’s something to keep me busy until I retire”, “It’s a business I want to build and pass on to my children” or “I want to create a multi-unit franchise I can then sell for a large capital gain.”Apart from anything else, the answer gives the franchisor a good idea of whether the candidate meets its own requirements and is going to operate the business in the way that is intended within the system. It also helps to inform the business plan and guide the level of support that may be necessary during the lifetime of the particular franchised outlet.Franchisors should also know their own exit plan, which will usually be an eventual sale to another franchisor, a group of their franchisees, their management team or a trade buyer within the sector in which the franchise operates.

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