Sell an existing franchise, or buy an ongoing concern!
Buying a franchise resale – a few tips!
When you buy a franchise resale remember there are three parties involved. That’s you the buyer, then the seller and then the franchisor. The franchisor will need to approve you as a franchisee as they are the only ones who can grant the license.
What costs do I pay when buying a franchise resale?
You will likely have to pay for training over and above the cost of the franchise sale price so find out that figure from the franchisor. In some franchise sales the outgoing franchisee (the seller) may absorb this cost into their sales price. It’s a part of the price negotiation.
The seller will also have some fees to pay to transfer the license and you may both need to pay your own legal costs. When it comes to the time to pay for the franchise resale this is usually done through the franchisor. This provides some security and also allows the franchisor to deduct whatever fees the seller owes them before sending on the balance.
Do I get a new agreement?
Technically the seller only has the right to sell the unexpired term of their franchise agreement.
However, many franchisors will grant the incoming buyer a full franchise term when they buy a franchise resale. Be sure to check this with the franchisor. So the original agreement is terminated and you get a new one. Otherwise the old agreement may be novated to you with a special agreement.
What if I’m selling an established franchise?
Lime’s franchise resales database currently has over 30,000 “would be” business owners registered. Many have come through our own directory www.franchiselife.co.uk. So we may already know a buyer for your business! We don’t know of any other company that proactively tries to sell your franchise as much as we do. Read on to find out how to get the best price for your established franchise.
Proven background brokering franchise resales
We have already sold over 200 ongoing concerns and dozens of re-start businesses. In both franchised and non franchised environments. Unlike traditional business transfer agents, we have direct access to thousands of business buyers that have started their research in the franchise industry. Many of those people go on to acquire a franchise at some point in their career. Lime’s executives have also sold entire franchise networks to corporate buyers and entrepreneurial high net worth individuals.
We follow a unique 8 step Business Sale Process to sell an existing franchise:
1. Our own franchise database:
2. Online franchise resales UK websites: These include www.franchiselife.co.uk and the market leading business transfer websites. In all, we will commit to placing over £1500 worth of online media advertising to sell your business.
3. Direct Approaches: We profile potential buyers from other businesses and make direct approaches.
4. Professional Franchise Publicity: Designed by experienced business brokers in conjunction with our graphic designers your business advert will look the best that it can.
6. Social Media: Our own social media channels on Twitter and Facebook reach thousands of potential buyers and is a proven route to help you to sell an existing franchise
7. Value: Your business marketed for only £295 plus vat followed by the industry’s lowest success only commission of 5% when you sell your business.
8. Put you in touch with those who can provide the legal bits for a secure franchise resale.
The legal parts of franchise resales
It’s important when buying or selling a franchise that the legal side is handled by an experienced franchise lawyer. When you buy or sell a franchise you are entering into a legal contract with a third party. You need to be clear about precisely what you are buying or selling and for how much. A properly drafted business purchase agreement can provide clarity in relation to the terms of the deal. It will also include issues such as the following:
- Which business assets are being sold?
- Who is liable for the debts of the business, including any outstanding finance on key assets?
- Are there any employee issues?
- Has the seller made any representations to the buyer about the business on which the buyer is relying? If so, what are they and what happens if they prove to be false?
We recommend dealing with a firm like Darwin Gray for example. They are a firm of business lawyers based in Cardiff who are experts in the legal aspects of franchising. Lime regularly works with them to ensure that buyers or sellers of franchises that we handle have peace of mind that the legal side of their deal has been looked after by experts. Stephen Thompson, the firm’s Managing Partner, is also head of the firm’s franchising team and can be contacted on 029 2082 9136 or firstname.lastname@example.org. Contact Stephen for a no obligation fixed fee quotation.
How long do franchise resales take to complete?
Franchise Resales can take time to sell. Very much in the same way as selling your house. Some sell very quickly some take a while and there are a lot of variables. Factors including the availability of finance, market trends and of course your flexibility with regard to price all count. As does how the deal is structured e.g earn outs and post-sale assistance. We can help you to navigate all of these issues and bring everything to a successful conclusion.
Give us a call on 01274 662001 and our team at Lime Licensing will be happy to explain more.