selling_your_franchise_business

As a franchise business owner, it’s easy to get caught up in day-to-day management responsibilities. But every entrepreneur needs to have a vision for how their ownership will conclude – whether that involves a transfer of power to family members, friends, or an outsider.

Why would you ever sell your franchise business? Health complications, loss of passion for the industry, or planned retirement – all of these reasons for leaving, however likely or unlikely, can come up unexpectedly.

Now, if you’re like most business moguls, you’ll probably feel more comfortable passing your business on to your children or siblings. After all, 90% of all U.S. businesses are family-owned or controlled by a family. Just because the process is common, doesn’t mean it’s foolproof though. Two-thirds of businesses passed on to the next generation fail, and 50% don’t survive after they’re passed from the second to the third generation. Sure, having a franchise business with a proven track record may reduce the risk of failure, but avoiding financial ruin doesn’t exactly land you in the realm of success.

So, how can you ensure a successful transition of your business to a family member? Let’s go over four questions you should consider before plunging headfirst into selling.

1. Would you sell to this family member if they weren’t related to you?

You need a qualified, experienced leader for your company. Don’t transfer the business over to your son or daughter if they don’t have any experience running it.

Expose your successor to different aspects of the business, so that they’re familiarized with everything from cashier work to high-level operations. Try to understand where their potential strengths and weaknesses lie.

Every person has a unique leadership style, so making sure the structure of the business aligns with your family member’s core values is crucial. If neither mesh, even after persistent training, consider other options.

2. What’s the market for your business look like? How will it look in ten years?

No parent wants to saddle their children with debt. Unfortunately, this is often the case in transferring ownership before an economic downturn.

Pay attention to statistics released by reputable sources. Keep up with weekly blogs and journalism in your industry, and the franchise world as a whole. Arranging a trade sale of the business might be the more lucrative option in the long run, especially if you foresee dwindling sales in the future.

3. Should I gift my business or put a price tag on it?

Your natural inclination may be to gift your business to a member of your family as a show of kindness. However, you may be doing them more harm than good.

Many owners who have left their businesses behind without an exchange of funds feel the need to pass judgement on every decision afterward. Some even interfere in the choice to enter or exit certain markets. We call them helicopter entrepreneurs, and trust us, you do not want to be one.

A check and a payment schedule can indicate a successor means business. If you feel the least bit like you might try to control your former company after retiring, think about setting a price.

4. What can I put in writing?

Family relations can be messy. How people interact at the dinner table is not how they react when financial gain and loss are on the line. While a handshake or a verbal agreement may seem to work on the surface, they can create sources of contention at a later date.

Draft a buy-and-sell agreement to protect yourself and everyone else involved. This should include details like business valuation, payroll arrangements (if you plan on receiving an income after the transition), and whether you’ll continue to provide consultation or leadership advice.

Don’t be afraid to bring in experts such as lawyers, accountants, and financial advisors to help facilitate a smooth transfer of ownership. Having an outside party mitigate conflict will produce a better outcome for all.


Like to learn about the advantages of franchising with Allegra?

Part of a burgeoning $178 billion industry, Allegra Network is one of the leading providers of graphic communications and marketing in the country, with 40+ years of proven history. We “bring to the table” some uncommon advantages that are worthy of your consideration. Among them, unsurpassed industry experience — including our exclusive Allegra Performance Groups and our exclusive Allegra Profit Mastery Assessments (just ask!) Leadership’s investment in your success. And, an unwavering commitment to innovation.

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Through ownership, you’ll align yourself with an industry leader

Allegra’s parent company — Alliance Franchise Brands LLC — is a world leader in marketing and visual communications. It has grown to become a holding company for nine franchise concepts, linking more than 650 locations in North America and the United Kingdom.

Our independently-owned and operated franchises provide national, regional and local businesses and organizations with a one-stop resource for technologically advanced and strategically sound solutions for their graphic communications needs.

The company’s brands include Allegra Marketing Print Mail, American Speedy Printing, Image360, Insty-Prints, KKP, Signs By Tomorrow, Signs Now, Zippy Print and RSVP Publications.