As a franchise consultant, a question I hear is “What are some of the exit strategies you can use after franchising your business?” National Franchise Associates clients have explored a number of exit strategies, many of which offer a tremendous return on investment when franchising your business.
These exit strategies include:
- Building the company for their families to inherit: Many Franchisors are launched as family-owned businesses. The motivation is to build value for the generations to come. This can be quite a positive motivation when franchising your business.
- Selling the Franchisor company: When franchising your business, the income stream from initial franchise fees, on-going service fees, sales of products and/or services to Franchisees and possible real estate programs can become very substantial. Much of this income is recurring. Depending upon the specifics of your program when franchising your business, it is not unusual to earn $60,000 to $90,000 annually from service fees alone per franchise location. As you can see, a well-run franchise company can be very a valuable asset to sell.
- Purchasing other companies: Many Franchisors purchase other companies.
- At various times, McDonald’s has owned all or a portion of the following companies: Donatos Pizza, Chipotle Mexican Grill, Pret A Manger, Redbox, Aroma and Boston Market, among others.
- Wendy’s has owned Arby’s, Tim Hortons, Baja Fresh and Pasta Pomodoro.
- Diversifying can help both strengthen the brand and increase market share when franchising your business.
- Merging with other companies: When franchising your business, merging with other companies can also strengthen the brand. A merger can increase market share, enhance economies of scales, reduce competition and increase profits.
- Purchasing suppliers: Franchisors often expand through purchasing key suppliers. This strategy helps the franchise company enjoy more efficient operations and ultimately a stronger competitive position.
- Going public: The payout can be tremendous for the owners of a franchise company that launches either a public or private stock offering. Often, this is the ultimate goal when franchising your business.
As you can see, when franchising your business, there are a variety of exit strategies you can consider, depending upon your individual goals.
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So, if you are still asking the “should I franchise my business” question over and over with no clear direction, give us a call at (706) 356-5637, or contact us through our online form. We look forward to helping you take your business to the next level and beyond.