Franchisor Exit Strategy
Whether you want to sell your company, take it public, pass it on to your children or just hold on and retire, franchising provides the aggressive growth, accountability structure and predictable revenue to appeal to several types of exit strategies.
Franchising leverages your systems of operation to provide an opportunity for people to get in business for themselves utilizing your proven business model. Franchisees act as independent business owners and are not working for a manager, director, or boss, they work for themselves.
Franchising creates a secure revenue stream with franchisees that are dedicated to their own growth. Royalties, which are paid off of gross sales, increase as franchisees become more successful with their business. Franchisees are putting up the money and the time to build their franchise and are rewarded off the bottom line. The motivational issues and managerial oversight that are required in corporate expansion are not as prevalent in franchise growth. This cycle of growth creates a terrific source of predictable revenue which creates a safer transition of ownership and strong interest from private equity firms and investors. It is for this reason that franchise companies are typically valued at 7-10 times EBITDA, several times higher than the average 5 times valuation for business.
When the owner of the company sells or retires, franchisees are still responsible for their own stores and generating profits for themselves, a trait which transcends all exit strategies.
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The issue of exit strategies is one of the many topics of Francorp’s online “How to Franchise Your Business” seminar that is available FREE when you mention this newsletter ($195 value). To learn more about franchising, visit http://www.francorp.com or call 800-372-6244. As a reader of this newsletter, to sign up for your FREE seminar ($195 value) or take the FREE franchise quiz, click the buttons on the left for direct access.