franchiseresales


discussions about their eventual departure, helps to create an embracing attitude towards the resales concept. I mentioned the word fear and that is


deliberate. People are often scared or concerned about matters they do not understand and, given the fact that most franchisees only sell a business once, they don’t always understand how to approach it or what the process involves. It is important not to underestimate this emotion because it is at the root of most of the angst that can occur in resales discussions between franchisors and their franchisees. The way to overcome any friction is to set out


the resales process from the start. Your entire resales process and its associated documentation


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working towards this is also an important part of their business planning strategy and that to do so will optimise their exit position – it is then that the franchisor’s resales activity and processes are truly effective. So how are we to achieve this nirvana? What


are the ways in which we can create a culture of accepting resales within the network? The answer is reasonably simple – communication and talking to the franchisees. The key to creating a resales-positive


culture within a franchise network is to take the mystique out of the process. Reducing the mystery and misunderstanding helps to eradicate fear. Clear communication with franchisees, enabling them to have open


demonstrating a life-cycle for them. This holistic approach has the potential to encourage even more interest in your network from prospective franchisees. This discussion also provides a forum for


you to demonstrate the benefits of joining your network – by showing that the value of the business is not just about how much they can make in drawings each year but about the totality of the income generated through the franchise as they grow the business. This includes drawings, re-invested profits and eventual selling price – a fully rounded offering. This initial discussion – and its supporting


When franchisees understand that they are part of a cyclical process –and that everyone who joins a franchise network will eventually leave it – the franchisor’s resales activity and processes are truly effective


should be thoroughly laid out in a ‘Guide to Selling your Franchise’. This will, ideally, form some part of your operations and procedures manual(s) meaning that from day one, when the franchisee joins, they are equipped with an instructive description of how they will leave the company. It’s true that the cynical view is that ops manuals and the like are never read, but the point is they are in fact read at least once and it will register with franchisees that there is a process in place that can be referred to in the future. They may not have instant recall when it comes to the details but the knowledge will be there that such a document and process exists. Even before that, it will be helpful to ensure


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that a conversation about departure and resales takes place during the recruitment process. In discussion with prospective purchasers, you can not only show that you are interested in bringing them in – with all the attendant support processes, training, guidance, etc – but that you are also supporting them at their exit,


detail in the ops manual – should not be the end of the process however. To create a truly resales-positive culture – one that accepts the need for a structured exit as well as induction – it is important to maintain the subject as an ongoing discussion. Clearly this is not an appropriate key topic at all meetings, but the inclusion of exit-planning seminars – delivered at annual conferences or regional meetings from time to time – given either by yourself or using an external facilitator will keep the franchisees focused on the end game. If your franchise has head-office support


working with franchisees on a one-to-one business-planning basis it is important that they also understand the resales processes and especially what are the key levers within your industry sector that will drive profitable growth. By encouraging franchisees to focus on the


ultimate achievement – growing their business from £X profit to £Y profit over a number of years to achieve £Z selling price – means also growing the sales using the tried-and-tested model’s marketing and sales initiatives. Thus – lo and behold! – there is a growth in the franchisee’s business that is mutually beneficial since the result is an increase in management services fees. This combination of commercial thinking and individual coaching is one of the most constructive side-effects of creating a resales culture. Nurturing the understanding of resales in


your network and focusing all franchisees on the strategy for their eventual exit will bring mutually beneficial growth. Surely that is what this symbiotic relationship is all about. n


Author’s note


Derrick Simpson is a director at Franchise Resales. For more information you can contact him on derricks@franchiseresales.co.uk


Franchisor News | 11


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