How To Sell A Franchise Complete Toolkit

Preparation For Sale

Your first step will be to complete our new client questionnaire.  Then you will submit your financial statements/tax returns. (Your information is fully confidential at all times.)  One of our client managers will be available to assist you if you get stuck.  We will review your provided information, ask you more questions, and ‘recast’ the financials.

Business Value (Or 3 Other Levels Of Valuation)

Next you’ll want to determine which level of business valuation you require.  We will work with you to ‘recast’ your financials,  determine Sellers Discretionary Earnings, and provide you with an opinion of business value.  If you need more detailed analysis of the valuation methods used, industry rules of thumb, sold market comparables, as well as industry reports and regional demographics, we also offer Detailed and Comprehensive business valuations. These are USPAP compliant and signed and certified by our ASA/CVA certified appraisers.  All reports will let you know ahead of time the general parameters of what your company could be sold for.  Let us know if you’d like to see Business Valuation samples.

Business Profile

Once you are comfortable with the established value range and have decided on a ‘go to market’ asking price, you’ll email or upload photos and videos of your business location (if appropriate), region, franchise marketing materials, and anything else that will help a buyer understand your business.

We will then professionally produce a customized Business Profile incorporating the content from your questionnaire, the photos/videos you uploaded, marketing materials, and our video interview (see below).

Video Seller Interview

This “Virtual Showing” has become a cornerstone of our selling process!  Our administrative staff will schedule a time to do a Zoom interview Q&A where we dialog with you as if we were buyers, what would we want to know about your business?  This video will be merged with other photos and videos you’ve provided and gets edited to about 10-12 minutes long.  This video interview (and sometimes tour) basically replaces the first phone call or onsite meeting with the buyer.  Having this video will allow qualified buyers to “preview your business” without having to schedule onsite showings and cumbersome conference calls, thus saving hours of meetings, and further ensuring confidentiality.  <This video is not mandatory, but it becomes a very helpful tool in the sale process.>

Buyer Marketing

Franchise Sellers will post your company for sale (*confidentially) on 4 or more of the major business for sale related websites.  This would cost you over $800 to directly pay for ads on these websites.  We also post your business on our FranchiseSellers.com business search portal.  (*Most sellers prefer that the ads are generic. We sell “the sizzle” but not “the steak”. Ads are created in a way where the reader will get excited enough to ask for more info, but cannot know exactly what business it is without inquiring further.)

Franchise Sellers will also email your business listing as a ‘buyer blast’ to those qualified buyers already in our database seeking businesses like yours, based on location, industry, size, etc.

Buyer Management

As each buyer responds to our ads for your business, the buyer must first complete a Buyer Registration providing that they have the skills and financial resources required to purchase your business, and they must agree to a non-disclosure statement.  This form will be completed and submitted direct to Franchise Sellers from our website. We will review their buyer profile to determine their financial abilities and skill set.

Franchise Sellers will email your Business Profile to each of the buyers, and CC you for an introduction.

THIS IS WHERE YOU TAKE OVER ……  YOU WILL WORK WITH EACH BUYER DIRECTLY UNTIL THE BUSINESS IS SOLD. (with our help behind the scenes)

You will want to make contact with each new buyer a day or two later to answer any questions, schedule a showing, provide additional information, and more.  Continue to reach out to each buyer until they either agree to submitting an offer, or they go away.  We are here for you at each step along the way.   As you work with buyers, you can call us or email us at any time with questions.

Offer / Counter Offer / Due Diligence

Using our provided folder of sample forms and agreements, all the while leaning heavily on your other primary business advisors (accountants, attorneys, financial planners, etc.), you will work with the buyer to negotiate the letter of intent, counter-offer, and asset/stock purchase agreement. You’ll use our provided Due Diligence Checklist to ensure that every step gets it’s proper attention, including Lending, and Closing.

Franchisor Disclosure and Discovery

As soon as possible upon acceptance of an offer, you will want to make sure that the buyer has reached out to your Franchisor to start the franchise disclosure, discovery, and qualification process.  There are a few deadlines that have to be met before the Franchisor can approve the buyer as a new franchisee.  This includes the buyer receiving the Franchise Disclosure Document (FDD) and going to Discover Day.  It is common that a closing gets delayed because this step wasn’t taken care of early on!

Business Loan Approval

Your buyer will almost always require some form of financing, whether it be a conventional loan, asset loan, SBA guaranteed loan, factoring, home-equity loan, or seller financing. The most common business loan by far is the 7(a) business acquisition loan through the Small Business Administration (SBA).  The SBA lending process is long and difficult.  Make sure that the buyer is working with one or more lenders (preferably 2-3) to get loan approval.  This will take 60-90 days or more.  Buyers should be working with lenders simultaneous to all other aspects of due diligence.

Closing

The closing process is different depending on your state.  Your forms folder will include sample due diligence and closing documents to use in preparation for the Closing.  However, it is imperative that you work with a reputable business attorney and accountant to review (or create) all closing documents.  Depending on your state, the Closing will be facilitated by either a title & escrow company, the buyer or sellers’ attorney, or a third-party attorney that represents the ‘transaction’.

NOTE: THERE ARE A LOT OF MOVING PARTS TO THE BUSINESS ACQUISITION PROCESS, WHICH IS WHY BROKERS CHARGE THE FEES THEY DO. IF AT ANY TIME YOU DECIDE THAT YOU NO LONGER WANT TO SELL IT YOURSELF, LET US KNOW, AGREE TO PAYING OUR SUCCESS FEE AT CLOSING, AND WE’LL MANAGE EVERY STEP OF THE BUSINESS SELLING PROCESS FOR YOU. How to sell a franchise business  H ow to sell a franchise business.