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Is NOW the Time to Sell Your Franchise?

If you’ve been thinking about retiring or simply moving on within
a couple of years, there are a lot of good reasons to make this your year to sell.

One is the economy. It’s been giving off mixed signals for more than a year after we’ve technically recovered from the pandemic. The stock market is flat; inflation is still rampant. Your costs have gone up, which means your cash flow is tighter. That’s eroding the value of your business bit by bit.

Interest rates are rising and will likely continue for a few quarters. As the cost of money goes up, the pool of qualified buyers for your business will shrink. As the talk of recession continues, some buyers will decide to stay on the sidelines rather than take on a new venture.

You may also find it to your advantage to exit based on your franchise agreement. Most franchisees have a 10-year agreement when they buy. New agreements often include new terms that might not be as workable for you. A well-known shipping franchisor, for example, is now requiring franchisees to be open 7 days a week, which puts even more pressure on labor and costs.

New franchise agreements also often include requirements for upgrades and improvements. Facility remodels, signage, and other required upgrades can be expensive. Costs can run into tens of thousands of dollars. If your franchise is close to the horizon for making these upgrades, buyers will want a discount on the sale price. Other changes that can come with new franchise agreements can include increased fees and royalty costs, changes in territory rights, and increases in transfer fees. These are all issues you should research and consider if you’re thinking about selling.

The good news is that these factors have not yet affected the market for franchise sales. We’re still seeing a steady interest from buyers and still seeing high numbers of workers leaving the corporate lifestyle after the pandemic. According to the Bureau of Labor Statistics, a record number of workers left their jobs in 2021. The U.S. Census Bureau also reports that a record number of entrepreneurs applied for business applications.

When surveyed, 21% of business buyers identified as being part of the Great Resignation. Franchises are a great option for new business owners, so we believe there will be plenty of interest for the remainder of the year, at least.

Deciding when to sell is a personal decision based primarily on your stage of life and your financial situation. Timing your sale is always part science, part art form, and part wild guess. No one can predict what the economy, the labor market, or tax policy will look like in a few years. Our advice for franchise owners has been the same. Have an idea of the worth of your business, so you can be prepared to move forward if the time is right for you.

Find out what your business is worth HERE


About Franchise Clearly®
Franchise Clearly® specializes in reselling franchise businesses. Working with owners, they work through a defined proprietary process that finds highly qualified buyers and guides them quickly to the closing table. Their innovative team approach makes for a seamless process that nets the highest offer and the best terms possible for the seller.

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