How to Exit From Your Franchise Successfully
In America, we celebrate our freedoms and independence. Unfortunately, some entrepreneurs feel anything but independent from the burden of a franchise they regret buying into. In general, franchising is a great way to get into a proven business model with the backing and support of a regional or national brand. However, sometimes the situation just does not work out.
There are a few reasons a franchise business does not turn a profit. These include:
- Lack of necessary skills and training
- Poor territory selection
- Poor management
Franchise owners who have not broken even or have only recently crossed the break-even point may have decided it is time to cut their losses and move on. The challenge is that many companies charge franchise fees in the six figures and most are non-refundable. This is a large sum to try and recoup if you want to exit the business.
Before getting out of the business altogether, there are a couple things you can try:
Ask for More Training: If you do not feel you have received the necessary training and support to make the business work, it never hurts to ask for more training from the company. Every company has a strong interest in seeing their franchisees succeed; this helps build their brand and gives them credibility when recruiting additional franchisees. If you ask someone from corporate to come in and evaluate your operation and help identify opportunities for improvement, they are likely to make an effort to help put you on the right path.
Ask for a Different Territory: Perhaps the problem lies more in the market you are catering to rather than the business operation. There are some geographic locations that are simply not the best match for particular products and services. If there are other franchisees that are successful, then it is possible that all you need is to move (or expand) your territory.
How to Locate a Buyer: If your franchise is not profitable and you have done all you can do, then it is time to find a buyer. You can start by placing ads in online classified sites such as Craigslist, Backpage, and BizBuySell. Make sure to be very discreet in the ad not to identify your brand and location; otherwise, your employees and customers may get wind of it.
To expand your market and receive top dollar for your franchise, it is best to work with a business broker. Business intermediaries have access to numerous marketplaces and have in-depth experience with the business buying and selling process. They can advise you on what you need to do to prepare your business before putting it on the market, and help you navigate the selling process. This vastly increases your chances of breaking even or at the very least keeping your losses to a minimum.