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Franchise FAQ

Q. WHAT IS MY EXIT STRATEGY FROM MY FRANCHISE BUSINESS? AM I PERMITTED TO SELL IT?

Franchise Development Services (FDS) article image

Answered by Nigel Toplis, Managing Director of Recognition Express

A: Interestingly probably the first thing a new franchise owner should consider when they start their business is their exit strategy. That may sound strange, but at some point every franchise owner will sell his or her business and it often pays to have at least a strategy outlined when you invest in a new business.

My old mentor Moshe Gerstenhaber (Founder of Kall Kwik) believed the ideal time for a franchisee to remain in a franchise was about 10 years and they should use this time frame as a basis to form a business strategy. Some franchise owners see selling the business as the opportunity to make significant profits. My view is different. I believe you should you should look to make your profits out of the running of the business and see the sale of the business as the icing on the cake.

In my experience the vast majority of franchisors will both allow and enable franchise owners to sell their business. In fact many franchisors have a clause in their franchise agreement where they will ask for a fee on the sale of the business. The fee amount may be adjustable and dependent on the franchisor finding a buyer. Most of the time the franchisor will introduce a prospective buyer to the franchisee who is selling their business. However, the responsibility of selling the business is down to the franchise owner.

Q. WHAT PERSONAL QUALITIES DO MOST FRANCHISORS LOOK FOR IN PROSPECTIVE FRANCHISEES?

Answered by Sarah Robertson, Business Development Director of TaxAssist Accountants

A: Franchisees know that when they buy into a British Franchise Association affiliated franchise they are taking on a business with a proven business and franchising model. The franchisee needs to take on board the training and support offered by the franchisor and use this to the full in order to make a success of their own franchise.

Franchisees must be personable and have ambition and drive, as well as sufficient initiative and commercial acumen in order to manage the running of the business. It is also a prerequisite when taking on a franchise that franchisees recognise the need to follow the business model and the guidance of the franchisor.

Q. HOW WOULD YOU DESCRIBE THE LONG TERM RELATIONSHIP BETWEEN A FRANCHISOR AND A FRANCHISEE?

Answered by Alex Waite, Franchise Sales Director of Dream Doors

A: The relationship between franchisor and franchisee will change over the long term, but the most important element in any partnership is good communication.

In the early days, a franchisee has a great deal to learn and the support of the franchisor on a daily basis is critical to their survival. Over the years, this hand-holding will relax a little, and the franchisee will build up experience and knowledge that they can then communicate to new franchisees.

Through franchisee forums, everyone within the Dream Doors network can share ideas and best practice, as all franchisees are at different stages of their business lives. By introducing business coaching courses that suit different skill sets, all of our franchisees can benefit from training, whether they are just starting or looking to open a second showroom and employing more staff. At whatever stage they are at, we feel that training is imperative to the long term success of a franchisee.

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This is a Guidance for Franchisees article, have you read the following articles in this category?
» Franchise Development Services (FDS): Franchise FAQ
» Lloyds TSB Bank Plc: Lloyds TSB can help your franchise business get going.
» HSBC Bank Plc: It's not always easy to tell which franchise is hot
» Franchise Development Services (FDS): Charting a Course for Success
» Franchise Success TV: FranchiseSuccess.tv
» Franchise Development Services (FDS): Discover how to become a Successful Franchise Owner
» All Guidance for Franchisees Articles (99)

This article appeared on page 10 of the July/August 2008 edition of The Franchise Magazine
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» View Latest PDF (Nov 2006)
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This is a Guidance for Franchisees article, have you read the following articles in this category?
» Franchise Development Services (FDS): Franchise FAQ
» Lloyds TSB Bank Plc: Lloyds TSB can help your franchise business get going.
» HSBC Bank Plc: It's not always easy to tell which franchise is hot
» Franchise Development Services (FDS): Charting a Course for Success
» Franchise Success TV: FranchiseSuccess.tv
» Franchise Development Services (FDS): Discover how to become a Successful Franchise Owner
» All Guidance for Franchisees Articles (99)

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The Franchise Magazine reader response form
First Name		*	Phone 1		*
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Address		*	Would you relocate nationally?
Address2			Are you moving internationally?
Town/City
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