Selling a failing franchise can be a difficult and stressful situation. The good news is that there are steps that can be taken to help maximize the sale and make the process easier. In this article, we will discuss how to sell a failing franchise, including the value of the franchise, the steps to take prior to selling, and the importance of speaking with your franchisor. We will also cover the necessary steps to ensure the sale is successful and compliant with all franchise regulations. With the right resources and guidance, selling a failing franchise can be a smooth and successful process.

How to Sell a Failing Franchise?

Often the best answer to a franchise that is not succeeding is for the franchisee to sell the business to a new buyer. Before starting the process of selling an existing franchise, the franchisee and the business broker must be cognizant of the fact that any potential buyer must meet the franchisor’s approval. The franchisee must cure all defaults (including payment defaults) under the franchise agreement prior to the sale.

Valuing a Failing Franchise

When selling any business, the first thing to do is find its value. When valuing a franchise that has started to fail, an excellent place to start is by obtaining an independent valuation. A valuation will help the franchisee determine the best price to list the franchise and increase the chances of a successful sale.

Speaking with Your Franchisor

Start by contacting your franchisor. There is no reason to keep the sale confidential from your franchisor who is accustomed to their franchisees selling the business. There is a provision in most franchise agreements that outlines if a franchisee wishes to sell their business then they must seek and receive approval from the franchisor.

Marketing the Franchise to Potential Buyers

Once the valuation is completed and the franchisor is aware of the sale, the next step is to market the franchise to potential buyers. There are several online platforms available for selling businesses, however, a business broker is the best choice for helping to market and manage the sale. A business broker will have a better understanding of the market and the skills to negotiate with potential buyers.

Conclusion

Selling a failing franchise can be a difficult process, however, with the right resources and guidance, the sale can be successful. A business broker is essential for helping to market and manage the sale, while an independent valuation will help the franchisee determine the best price to list the business. Additionally, speaking with the franchisor is also key prior to selling any franchise. For more information on selling a business and finding a business broker, visit Atlantabusinesses.com.

What steps can you take to exit a struggling franchise?

A potential solution for a franchise that is not doing well is to transfer ownership to a third party. This would give the previous franchisee the opportunity to end any contractual commitments, such as the franchise agreement and any leases.

What becomes of a franchisee if the franchise is unsuccessful?

When the franchisor’s business is liquidated, their assets, such as their brand and franchise agreements, are sold off. Franchisees may be able to argue that the liquidation of the business means the end of their franchise agreement, thus freeing them from any obligations.

What is the best way to terminate my franchise?

Once the franchise agreement has been ended, it is necessary to cease using the franchisor’s trade name, trademarks, and service marks, fulfill a Covenant Not to Compete, settle any unpaid sums, return any franchisor manuals, and agree not to use any trade secrets.

What actions can a franchisor take to address the difficulties faced by their franchise?


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Develop a Plan of Action. …
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Re-invest in Your Franchise.

Check when your franchise agreement ends and evaluate the severity of the difficulties you are facing. Take a look at your expenses and consult with other franchisees to get an idea of the situation. Have a discussion with a lawyer to understand what your options are. Put together a plan of action and decide if it is best to reinvest in your franchise.