Franchising is a new way of selling medium sized companies that may be difficult to finance in traditional sales. Franchising in these situations allows each of the sites for the business to be sold as an independent company and to get funding on a bit-by-side basis. Franchising your business in these situations can be very beneficial and help fight the biggest barriers to the sale of many companies, financing.
Without financing for a new buyer, the sales price of a company would often be adjusted to compensate. This has led to the suppliers having to pay back the financing of the sale of their business to keep the value of the business. VR Business Brokers, Sunbelt Business Brokerage two of the most important companies North America brokers and the International Business Brokers Association all refer to the need to withdraw supplier financing to help sell the business or get a higher selling price for the business.
A company that is interested in selling should compare its new value based on franchising by or the entire company against a current valuation if sold as a part. While the first reasoning is to explore a method of selling your business. Making your business a franchise has advantages. The value of the business can be increased when factoring in the estimated value of the business is divided into parts sold as franchise plus the value of the resulting franchise system and current income as well as the value of potential growth opportunities can dramatically change the value of the business.
So what do you do when you intend to sell your business and you think franchising can be an option for you? Call a franchise expert to check a franchise strategy for the business and compare the potential value as a franchise compared to a valuation for the business as it stands.
Think of the TV show Income Property, on the show host Scott McGillivary evaluates a house for the ability to convert an area usually a basement into an income suite. He begins by calling a real estate agent to evaluate the value of a property, presenting two plans for an income suite to the home owner, both with varying costs and potential revenues. The homeowner decides for one of the two plans or not at all. He then continues to call a real estate agent to the conclusion to provide an updated evaluation when the suite is ready.
The evaluation of franchises is quite complex depending on the nature of the business and the structures that are in place. This evaluation needs an in-depth analysis to present a working plan. In terms of business, the resulting decision to franchise at a cost of time, effort and money with a resulting potential benefit will once be achieved. Armed with this information, a business owner can then proceed with knowledge.
Benefits to make your business a franchise system for selling out.
Increases business value. If you have built your business for several years, sell out money, but on what number. Revenue multipliers on companies are generally low for the risk. Franchising can dramatically increase the value of the business.
Spread the risk. Franchising in pieces increases the investor pool that would bring in own money and equity.
Financing. Financing for the sale of the company can be difficult in situations that achieve several smaller small business loans through state-guaranteed loan programs are sometimes the only method to fully pay out without returning loans to a new buyer.
Current income. Through the franchise business you get a current income source. Alternatively, if the ultimate goal is to fully sell, the sale of the franchise system will provide additional revenue.
Continuation of your business. Its hard to give up something youve built, by franchising you do not have to give up your identity developed from the business, if you choose to continue to work while selling pieces as a franchise.
Maximize the value. By wasting the unprofitable areas over time and gaining full price for profit centers, the valuation can increase. Think of all of these movies like Wall Street with reference to business breakdowns.