What to Have Ready Before You List Your Franchise

What to Have Ready Before You List Your Franchise

If you wait until a buyer asks, you will gather your documents at the worst moment, with a buyer waiting and a deal on the table. What to have ready before you list your franchise falls into two piles: the financial and business papers any serious buyer of a small business wants, and the franchise papers a generic checklist leaves out. This checklist is our own, built from how a franchise sale runs, not from a study. We found no published research on which documents shorten a sale, so we do not promise a number of days.

What financial papers should I have ready before I list my franchise?

Your profit and loss statements and your tax returns, for the last three full years if you can, plus a list of the personal and one-time costs that run through the books. A full valuation usually draws on your financials, and tax returns and P&Ls are standard in our industry.

Three years is our working target. We found no published rule on how many years a buyer needs, and a buyer's lender, if there is one, will set its own list. You do not need any of this in hand to start the conversation. It matters once a buyer is looking.

What is an add-back schedule?

It is a list of the items that restate your reported profit into what the business earns for one owner who runs it day to day. The main item is your own pay. The rest are personal costs and one-time costs that went through the business. Our article on SDE and EBITDA for a franchise sale explains how the figure is built and which one fits a franchise you run yourself.

Restating the books is work for a valuation professional, and our valuation team does it with owners. What you bring can be a plain list of the items you already know about. Write it down before a buyer asks for it.

What business papers will a buyer's attorney ask for?

On our list, these are the papers a buyer would want from any small business. None of this is specific to franchising, and it is worth having together because the list is long and the pieces live in different places.

• Ownership. If more than one person holds a stake, a simple chart of the entities and who owns what.
• Contracts and your lease. Every material contract. If you lease the location, read the lease for an assignment clause now, because passing a lease to a buyer may need the landlord's agreement.
• Customers. If a few accounts make up a large share of your sales, a summary of who they are and how revenue splits between them.
• Equipment and assets. A list of what the business owns and uses.
• Licenses and permits. The current ones, with a note on which can pass to a new owner and which a buyer must apply for. The office that issued each one can tell you.

Which franchise papers does a franchise seller need that a generic checklist skips?

Your franchise agreement and the Franchise Disclosure Document (FDD) you received before you signed. They show what your franchisor requires for a sale. Franchisor approval is part of every franchise sale, so we would expect a buyer's attorney to ask for both.

Start with Item 17 of the FDD. It is a table that summarises the franchise relationship and points to the section of your agreement behind each row. Rows (k) to (n) cover how the agreement defines a transfer, whether the franchisor must approve it, the conditions for approval and any right of first refusal. Rows (a) to (c) cover the length of the term, renewal or extension, and the requirements to renew (16 CFR 436.5(q), read on Cornell Law School's Legal Information Institute, 2026-10-26). Item 6 is where the franchisor lists fees beyond the initial fee, and the rule names transfers among the fee types that go there (paragraph (f)(1), same reading). Your agreement governs, not the summary and not this article.

Put these in your folder:

• The pages of the agreement that the Item 17 transfer rows point to, marked.
• Your term end date and renewal terms. Remaining term and renewal timing can affect what a buyer pays and how long you have to sell.
• Records that your royalties and fund payments are current, if your agreement ties approval to good standing. Row (m) and the section it points to will say.
• Anything in writing from your franchisor about work it expects at your location, such as a remodel. Whether the franchisor will require it as a condition of approving a buyer is for your agreement and your franchisor to say.

Our article on what happens when your franchisor has to approve your sale covers what the review checks and how a right of first refusal works.

Does getting these papers ready early change how long a sale takes?

It can remove one source of delay, and nobody has measured how much. We found no study of days saved, so this is our reasoning. A buyer's lender and your franchisor will each want the same financial and transfer information whenever you pull it together. Having it ready means a buyer's attorney can start reading your franchisor's approval terms while the price is still being discussed, instead of waiting on you.

If you own several units, build the folder unit by unit and add one page for the group. Each unit may sit under its own agreement with its own term and renewal date. We found no general answer on whether a franchisor reviews a group sale as one transfer or several, so that comes from your agreements and your franchisor.

What should I do first?

Three things you control. Pull your franchise agreement and FDD and mark Item 17 rows (k) to (n) and the sections they point to. Start a folder for the last three years of statements and returns. Write down the add-backs you already know about.

Then have a franchise attorney read your transfer language before you list, and ask your CPA to confirm your statements and returns, since we cannot read your agreement or your books from here.

A free Opinion of Value shows you the worth side of a sale and commits you to nothing. It is a personal valuation page with a custom video walkthrough recorded by a senior advisor, free and with no card on file. Request your free Opinion of Value when you want a number to plan around. When you are ready to look at the sale itself, our page on selling a franchise covers the steps.

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