EXPERTADVICE
What happens when my franchisee wants to sell their franchise?
Franchisors should be assisting their network with exit strategy preparation and advice. A franchisee should be planning their exit several years beforehand to ensure that their business affairs are in order and they maximise the value they can get for their franchise. Usually, business owners will wish to declare the lowest possible trading profi ts to reduce their tax liability. For the three years preceding the sale of the business, however, they should be looking to declare maximum profi ts to achieve the best possible sale price for the business. Notifying their bank of the intention to sell
the business as early as possible will ensure that the franchisee can benefi t from the advice and guidance that is readily available to support their plans. If you are in any doubt who to speak to then contact the bank’s franchise department for assistance. It would be prudent to ensure that the purchaser is receiving the appropriate banking and fi nance advice themselves; by directing them to speak with a franchise specialist bank, such as Lloyds, it is more likely that they will receive the professional and expert guidance they will need, ensuring that the purchase is completed.
RICHARD HOLDEN
Richard Holden is head of franchising at Lloyds Banking Group
Perhaps not surprisingly, deciding to expand your network internationally requires careful planning. Many franchisors contemplate expansion in response to an unsolicited enquiry. While such an approach is fl attering, it is not necessarily the best place to start. It may lead you, however, to think about the steps you will need to put in place to launch your brand in new markets, even if you ultimately select a different partner. One of the fi rst tasks is to consider how to
JANE MASIH
Jane Masih is director and head of franchising at Owen White Solicitors
What are the fi rst legal processes a franchisor looking to go international needs to do?
protect your brand in an overseas jurisdiction. A UK trademark will have very little practical effect and obtaining estimates of the costs and timescales involved as soon as possible is important. Take into account the resources that will
be required to recruit, train and support the master licensee or developer. Does your organisation have the skills in-house or will you need to recruit personnel who have experience of the jurisdiction you are considering for your fi rst overseas expansion? You will require legal documentation to refl ect the terms agreed with the master franchisee.
A lot of serious thought must be given to the key performance standards you will require the master franchisee to achieve. Your business system may operate well by the grant of a direct franchise to test the water. Alternatively, the prospect may be an experienced master franchisee with a track record of launching other brands and an infrastructure in place to recruit and support franchisees in the chosen territory. Another factor you need to consider is how easy will it be to export key products or systems to the chosen territory. Will it be easier to source the systems locally? If the answer is yes, how will you make sure that quality standards are upheld to ensure that your brand maintains uniformity with the domestic offering?
As with any new business venture,
preparation and planning are key to ensuring that expansion into new markets is rewarding. Success will not come cheaply, both in terms of the time required or the fi nancial investment, and a long-term approach will produce the best results for your franchise. n
If you would like to ask our experts a question please email
fnews@vmgl.com Franchisor News | 15
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