The Emotional Journey of Buying or Selling a Franchise

Deciding to buy or sell a franchise is a huge decision and not one to be taken lightly. In both scenarios, emotions can run high, impacting or even interfering with the decision making process.

1851 Franchise spoke with Tierra Encantada’s Chief Growth Officer Robert Thesing about the emotional journey of buying or selling a franchise and strategies entrepreneurs can use to prepare themselves for the journey and ensure they make sound, objective decisions when necessary.

Data-Driven Decision Making In the Buying Process

For most entrepreneurs, the decision to buy a franchise comes with a great deal of excitement. They might be chasing a lifelong dream of business ownership or taking advantage of a great investment opportunity. Selling a franchise can also be very exciting because the owner may feel ready for the change. However, as Thesing pointed out, there is bound to be uncertainty in transitioning from one opportunity to the next.

To mitigate the sense of nervousness that surrounds uncertainty, Thesing advised considering your reasons for your choice very carefully and pinning down your motivations.

“Why are you doing this? Do you want financial independence? Do you want to diversify your portfolio? Do you want to get out of a business that you're no longer passionate about?” he said. 

“List out those reasons and there shouldn't be any fewer than five because there needs to be a really compelling reason for why you are making such a big change.”

Thesing also strongly advised using data to help weed out emotional factors and drive your decision from a business-minded perspective. To do this, he recommended creating a sort of matrix to measure the options on the table. For example, if you are considering buying a franchise, he suggested creating a matrix that includes and measures factors like how passionate you are about a concept, your industry experience, the brand’s values and how they align with your own and the business’ profitability.

“Try to take a very consultative approach,” said Thesing.

Facing Scrutiny When Selling a Business

It is easy to become emotionally attached to a business you’ve invested a lot of time and money into. However, when it comes time to sell, it’s important to stay as objective as possible. This is easier said than done.

“The biggest thing that is unexpected in the selling process is the scrutiny that your business will encounter because even motivated buyers are going to want to look at all of the details of the business,” said Thesing. “It's easy to become emotional when somebody is scrutinizing your work. That personal sense of pride and ownership can get in the way of objectivity.”

Thesing’s advice for staying objective in the selling process? 

“Remember, it's a transaction,” he said.

Thesing explained that even though you may have decided to go into business with the brand for an emotional reason, or you may have emotional ties to the team you’ve built, you need to remove the extraneous factors and stay objective. If you don’t, you may risk losing a successful sale.

“If the seller is unable to maintain objectivity and provide very detailed responses as to why things may be the way that they are, that could lead to a lower valuation of the business,” said Thesing. “It could lead to uncertainty on the part of the buyer. What the buyer is looking for is stability.”

Navigating the Emotional Journey of Buying or Selling a Franchise Successfully

Although buying or selling a franchise is strictly business in a sense, we are all human and emotions are inevitable. It’s important to acknowledge that you’ll likely experience a rollercoaster of emotions throughout the process, but it is even more important to prepare yourself for that.

“When we've experienced a potential franchisee who's made it very far in the discovery process but then they drop off, it's because oftentimes they weren't emotionally prepared. They didn't realize what to expect going into the process and couldn’t work out how to make a decision.”

Going into the buying or selling process prepared for the highs and lows of excitement and uncertainty will allow you to soldier through and make data-driven, logical decisions based on what is best for you as an entrepreneur.

“If you haven't checked in with yourself about the emotional part of the process of buying and selling then stop what you're doing and go back to square one check in with yourself because otherwise you risk spending a lot of time and money in the process and then ultimately not being able to make a decision,” said Thesing. 

To learn more about buying and selling franchises, check out these resources:

• How to Buy a Franchise
• How to Start the Process of Buying a Franchise: A Comprehensive Guide
• A Guide To Selling Your Franchise in 5 Steps