Whether they have re-evaluated life goals due to the pandemic, are looking to spend precious time with family or are looking to a good retirement, many franchisees are worried they won’t be able to sell their franchises because of the impact of COVID-19 on the economy. Alistair Glaze, Chairman of Business Partnership, the national franchise network of business brokers, wants to combat those misguided assumptions.
“There’s been a marked increase in franchisees needing advice on how to sell their business as the pandemic has pushed them to think more pro-actively, as well as to consider de-risking. I want to explain why anyone contemplating exiting their franchise via a sale needn’t put their plans on hold,” said Alistair.
“Foreign buyers are still active in the UK, despite ongoing uncertainty because of Brexit – sterling remains weak, giving UK businesses additional appeal amongst buyers. Investors with capital are always looking for opportunities, no matter what is happening with the economy. There’s also been a solid demand for businesses that have shown themselves to be ‘COVID-proof’ – in terms of technology, automation and security – but also green shoots for struggling sectors such as hospitality.”
Preparing to exit a franchise might seem like it’s the end but Alistair believes it’s important for franchisees to realise that for whoever is taking over, it’s the beginning. Potential buyers aren’t buying the past of the business, they buy the future and need to be able to see how it will work and grow in their hands.
“Leave no doubt that your franchise has a viable future with growth opportunities and demonstrate this to potential buyers. Just as important – show the buyer that your involvement in the company hasn’t been focused solely on the immediate performance, but also on the long-term goals. Anyone preparing to exit needs to allow buyers to understand the potential direction of their business as well as the current position.
“Think about how you’d answer questions that a potential buyer might ask. For example, what are your major competitors doing that you’re not? What is the future potential of your business? Be prepared to share your knowledge and understanding of the opportunities that exist within your sector and how they impact your business.
“The time that you choose to sell your franchise is vital. On one hand, you need to be aware of how your business has grown and what its current vulnerabilities are resulting from this. On the other, you want to ensure that you have built sufficient value in your business to sell it at the best possible price. Franchisees, whether serial entrepreneurs or would-be retirees, should always be looking at exiting their investment because this is intelligent business thinking.
“During the pandemic, our regional partners have had to adapt their usual day-to-day practices. They’ve had to be more flexible in interactions with potential buyers, offering socially distanced viewings to ensure everyone stays safe. However, even with the impact of COVID-19, there’s still been significant interest from a wide range of buyers.”
Douglas Craig is the regional partner for Business Partnership Bromley, Croydon and Southeast London. He thinks the pandemic has made people who are employed, or have recently been made redundant, evaluate what’s important to them. “I believe the main impact of COVID-19 on the market has been prompted by uncertainty which has made people want to take charge of their own destiny. This has brought buyers to the table who weren’t there before – those who had never even thought about running their own business.
“For these people, buying a franchise appeals because it is less risky than starting a business from scratch. Then when they find out that they can buy an existing franchise from an exiting franchisee, it becomes even more appealing as they also have an existing customer base to immediately trade from, as well the wealth of support from a franchisor.
“We also have to work with the franchisor when we’re checking a potential buyers background. These checks have to be carried out so that we can assess whether a buyer’s commercial experience fits in with the franchisor’s requirements. We’re predicting the market will return to pre-COVID levels in terms of business sales confidence by Autumn, so I’m expecting to support a number of successful franchise sales before the end of year.”
