How to hand over the reins of your franchise with care when it’s acquired

Entrepreneurs in the franchise space dedicate a huge amount of energy to signing their first franchisee and growing their networks but just as important is considering your end game. In recent times, there have been many franchises achieving high-profile exits, with Countrywide Grounds Maintenance, Bright & Beautiful, Barking Mad, Home Instead Senior Care UK and Northwood all being snapped up in the last year alone. But while these kinds of exits give franchisors a much welcome chance to reap a reward for their hard work, they require careful planning to ensure the network doesn’t suffer during the transition.

It’s unlikely to provoke many gasps to hear that planning to sell your franchise isn’t something that just happens overnight. “You’re talking years,” says Stephen Hemsley, chairman of Franchise Brands, the multi-brand franchisor that owns Metro Rod, ChipsAway, Ovenclean and Barking Mad. “You can’t start planning three months before you leave.” However, the more heavily a franchisor is involved in the day-to-day running of the network, the more the complexity of planning their departure increases, as losing both its owner and the lynchpin of its leadership in short succession could have a devastating impact on a franchise. “You don’t want the franchisee community to be faced with a change of leader and then a change of owner,” Hemsley says. “So if a franchisor is very involved in recruiting, motivating and liaising with the franchise community, then planning their exit will take a lot longer.”

This is why it’s absolutely critical for any franchisor to ensure the right person is waiting in the wings for when they exit stage left. “You need some strong leadership so that whoever buys the business can continue to run it successfully,” says Jeff Meyers, VP of international operations at Dwyer Group, the multi-brand franchisor that owns franchise brands including Drain Doctor, Bright & Beautiful and Countrywide Grounds Maintenance. “They then won’t have to go backwards in trying to replace key people or knowledge that has been lost.” Fortunately, it’s rare that many franchisors are the chief cook and bottle washer: they have a legion of experienced strategists and leaders in the making supporting them. And even if there’s nobody that fits the bill, the new owner may have an idea of where they can locate the right individual for the job. “If there is already a strong second that could be moved into that position, you’d probably look within the company first,” Meyers says. “If not then you’ve got to come into the acquisition with somebody in mind because you can’t have a lack of leadership for very long.”

However, maintaining continuity once the founder exits isn’t just about having someone to assume command: making sure that there won’t be significant upheaval in the people franchisees are dealing with at head office will also help keep any adjustment period to a minimum. “I’ve never come across a franchise yet that isn’t dependent on the head-office team,” says Hemsley. “And the most important people to have in place are the franchisee-facing team, whether that’s business development managers or trainers.” Conversely, franchisees are unlikely to have much regular interaction with back-office functions, meaning that introducing new faces in the finance department is unlikely to ruffle many feathers. “Marketing sits somewhere in the middle: if they’ve got a central national advertising fund and the franchisees are heavily involved in directing that, the people running that team are absolutely key,” Hemsley says. “If that’s not the case I would say it’s a skill set you can buy in.”