If you’re thinking of selling your Midas franchise, you may think that the easiest and best option is to sell to another franchisee. You’re busy running your business, and the idea of just picking up the phone and talking to another franchise owner is appealing. Here are three myths about selling within the franchise:
Myth #1: A current franchise owner will have a shorter learning curve and a better feel for the business. It’s true that a current Midas franchisee will understand the business, but it doesn’t guarantee that they’ll be more likely to succeed. Operating two or more units is exponentially more complex than owning a single unit, and a franchisee may find it challenging to give their full attention to both units.
We’ve found that a motivated buyer with financial means and solid management experience can step into almost any business and be successful. An effective owner will be focused on the business, not the shop, working on customer satisfaction and growth. With the support of the franchise, even someone new to the industry can be successful.
Myth #2: Another franchisee will have a quicker approval process from corporate. The franchisor vets both internal and external buyers carefully. The process is almost exactly the same for making sure a current franchisee and an external buyer have the financial ability and business experience to continue the current owner’s success.
In fact, a current franchisee may have a disadvantage in the corporate approval process. They’re a known entity; the company will have years of data about the unit’s performance, profitability, and customer ratings. If the franchisee has been a mid-level performer (or has issues with their current unit), the franchisor might welcome a fresh start with an owner from outside the company.
Myth #3: I’ll get about the same price for my business from another owner as I’d get on the open market. Buying into this myth could be costly. We sell franchises every day, and we know from experience that the only way to ensure you’re getting full value for your company is to test the open market. You may be able to get one or two franchisees interested in purchasing your unit if you work at making the connection. But we have over 21,000 motivated buyers in our database looking for a business just like yours.
For the past two years, we’ve averaged 4.2 offers for every franchise we’ve sold . More competition means better offers and better terms. Even if your eventual buyer is a fellow franchisee, they’ll be much more motivated to put their best offer on the table and close quickly – they’ll know you have options.
The offer you get for your franchise will be based on Seller’s Discretionary Earnings (SDE). SDE presents a clear picture of the business’s true profitability and cash flow, allowing buyers to assess the potential return on their investment. Your selling price will be a multiple of your SDE, so it’s important to weigh a (potentially) quicker and easier selling process against a higher offer and better terms.
If more competition raises the multiple for your business, you could realize tens of thousands more dollars from your sale. We can get your business in front of thousands of motivated buyers while you focus on operations and profitability. The first step is to find out what your business is worth.
