Thinking About A Re-Sale? Franchise Brands Should Consider These Factors Before Moving Forward.

Scott Thompson, CFE, and vice president of franchise development for Premium Franchise Brands gives advice for the best strategies to successfully handle a franchise re-sale.

By Nick Powills1851 Franchise Publisher

SPONSOREDUpdated 9:21PM • 05/05/16

As any franchise brand develops, the reality of re-sales is inevitable. For Premium Franchise Brands, which owns JAN-PRO and Maid Right, re-sales occur for various reasons. Whether an operator who has been in the system for decades is ready to retire, or a new franchisee decides to choose a different path, changes in ownership will continue to happen. For a franchisor, the priority is to keep the units in which they have invested time and money open for business. Scott Thompson, CFE, and vice president of franchise development for Premium Franchise Brands says these three elements are keys to a successful franchise re-sale.

Keep Detailed Records

Franchise re-sales often move much more quickly than the process of launching a new unit or territory. Since re-sales usually have a quicker turnaround pace, it is important to keep accurate and detailed records to ease the transition. A successful resale requires having detailed profit and loss statements and current balance sheets recorded as well as the company’s EBITDA available. Additionally, the management structure should be clear and well documented so a new owner or manager can step in and take over the day-to-day business operations and become efficient and profitable quickly. Thompson recommends that these documents be packaged together conveniently in a packet or brochure to share with potential buyers and should additionally include images of the facility, corporate structural charts and market information like population and demographics.

Find the Right Candidate

In any franchise sale, selecting the best candidate is key. In a re-sale, it is even more important to select a new owner who will be able to take leadership of an already established market to continue the brand’s success. When handling a territory that is already experiencing a transition, the company needs to be a good fit for the new franchisee and vice versa so it does not result in another quick turnover re-sale. Brand leadership should have a proven process in place to maximize the speed and quality of candidate selection for re-sales.

Be Flexible

Beyond staying organized and logistically prepared to handle a re-sale, it is equally important to stay flexible during the process. As previously mentioned, a re-sale can be unexpected, fast-paced and potentially accompanied by out of the ordinary circumstances, such as economic hardship or lack of support from the existing franchisee. Flexibility from the franchisor’s perspective will put the new franchisee at ease and begin their new journey with the brand on a positive note. Thompson notes that staying open-minded to new ideas and adding younger franchisees to a mature system is valuable for re-sales, as the transfer of ownership is an opportunity to reinvigorate the company. Creating a system that allows the franchisor to maintain a flexible and positive outlook is a great way to make the most of the change.