The short answer
There are four common ways to exit a franchise: sell through the franchisor, hire a business broker, sell it yourself, or ask a franchise consultant who works with your brand. The best time to plan your exit is before you open, so you are never deciding under pressure.
This is a recap of my column on Entrepreneur. Read the full column on Entrepreneur.
Key takeaways
- People exit for many reasons, including retirement, a job offer, a life change, an unsolicited offer or a business that is struggling.
- A struggling location still has value: a buyer inherits the lease, equipment, staff and customers you already built.
- Keep your franchisor informed. Mature brands often have resale teams or broker relationships.
- Business brokers usually work on an exclusive listing and charge a percentage of the sale price, sometimes up to about 10%, or a minimum flat fee.
The four exit options
| Option | Best when | Watch out for |
|---|---|---|
| Through the franchisor | The brand is mature and has a resale team or broker relationships | The franchisor will help, but it will not solve the sale for you |
| Business broker | You want to sell within about 6 to 12 months | Exclusive listing terms, often 12 months, and a fee based on the sale price |
| Sell it yourself | You already have a buyer, such as a customer or employee | Without a buyer, marketing the sale takes real time and effort |
| Franchise consultant | A consultant works with your brand and has candidates looking for it | Any fee is usually paid by you as the seller, not the franchisor |
Check your exit before you sign
Item 17 of the Franchise Disclosure Document covers renewal, termination and transfer. Before signing, look at whether the franchisor must approve a buyer, whether there is a transfer fee, and whether the franchisor has a right of first refusal. Knowing these terms up front makes a future sale smoother. Franchise fees explained.
Frequently asked questions
Can I sell my franchise?
Usually, yes. Most franchise agreements allow a transfer to a qualified buyer with the franchisor’s approval. Item 17 of the Franchise Disclosure Document explains the transfer terms, including any fee and right of first refusal.
How long does it take to sell a franchise?
It varies. Working with a business broker, many owners plan for about 6 to 12 months. Having your financial records, lease and operations in order shortens the process.
Read the full column on Entrepreneur · More franchise guides
David Busker is the Founder of FranchiseVision and a senior consultant with FranChoice, the premier national network of franchise consultants. David helps candidates exploring franchise ownership to set their criteria and matches them with the perfect franchise, then supports and guides them through due diligence and franchise signing. You can learn more about David at FranchiseVision.
