The Process Associated with Selling a Franchised Business Model

Jun 20, 2023

Robert T. Kiyosaki in the book, Rich Dad Poor Dad ( offers the following quote:

“Always start at the end before you begin. Professional investors always have an exit strategy before they invest. Knowing your exit strategy is an important investment fundamental.”

The purchase of a franchise is an investment decision.   It is an investment that has the potential to offer an executive leadership opportunity, entrepreneurial achievement, and financial remuneration in terms of career compensation, annual return on investment dividends, and significant appreciation on capital expenditure at time of sale.  In addition, it supplies the ability to own a business with a market recognized brand, strong support infrastructure, and significant upside potential that can be in an industry where relevant professional experience is possessed and the location can be selected. The IBA team of franchise brokers has a market leading level of knowledge & experience in the sale of franchised business models.  If you are interested in buying a franchise as an entrepreneur and placing it in Washington, Oregon, Idaho, Alaska, or elsewhere in the United States, we are available as a resource to answer questions and as an acquisition consultant (

IBA has professionals on its team with numerous years of experience selling start-up franchise opportunities.  However, our selection by entrepreneurs in the Pacific Northwest as business brokers to sell established, profitable franchises for strong market values in transactions facilitated in strict confidence employing best practices dates back to the 1970’s.   In IBA’s approximately fifty-year history, the firm has sold single location units and large chains of franchises.   Businesses represented have included food service entities including Arby’s, Taco Del Mar, Dairy Queen, and Tony Roma’s: children focused franchises ranging from Goddard Schools to Little Gym to Great Play; and industrial and business to business franchised entities such as Pirtek, Minuteman Press, and Servpro.

The sale of an established, profitable franchised business model is a sophisticated, nuanced process that includes enhanced elements over selling a privately held company or family business with no franchise affiliation.   The first step in the process associated with selling a franchise is to determine the estimated market value of the business to offer to potential buyers.  The market value of a franchised business will be impacted by market demand for the business model, territory availability, profitability, the number of entities being sold, the staff infrastructure in place, and the location of the business.  It is recommended to employ someone with local knowledge to do the assessment when valuing a business.  The resale value of the same franchise can vary greatly between cities and states.

The decision made to sell a franchised business; the next step is to market the opportunity to potential buyers.   Some entrepreneurs elect to have their franchisor market and try to sell their businesses.  The advantage of employing a franchisor to sell a business is that they fluently understand the business model and are regularly contacted by parties interested in owning franchises. The disadvantage is that they often lack knowledge of local market conditions, boots on the ground, and are more interested in selling new franchises than an existing location, as the financial reward is traditionally greater for a franchisor.   The advantages of employing a local business brokerage firm to sell a franchise includes comprehensive marketing programs, access to buyers who are local and more flexible in their acquisition criteria, confidential conference rooms for meetings, professional business sale negotiation & deal facilitation skills, real estate licenses to assist with facility lease assignments or property sales, attorney and accountant referrals, and the ability to source financing for the acquisition, so the maximum amount of cash can be received at time of sale.

Agreement reached with a buyer on a Letter of Intent for the purchase & sale of a franchised business the next step is to seek approval of the transaction by the franchisor. This process will generally involve a Discovery Day trip by the buyer to franchise corporate headquarters, a review of the franchise agreement and any collaborative marketing programs, execution of legal documentation, and a training period to ensure standardized products and services are offered to the public.

Approval of the transition of ownership achieved by the franchisor, standard business sale elements such as the asset or stock sale agreement, due diligence, tax allocation, lease assignment or real estate sale, and financing can be facilitated between the parties.  The level of knowledge and support provided by the franchisor with these issues can range from exemplary to non-existent.  An experienced, knowledgeable business broker will be highly familiar with these elements of a business purchase and sale.

One of the most famous franchise executives of all time was Ray Kroc of McDonald’s fame.  The following are three quotes from him that accurately sum up what an entrepreneur should be looking for philosophically from an organization when committing to a franchise as an investor.

“The more I help others to succeed, the more I succeed.”

“The key to success is being in the right place at the right time, recognizing that you are there, and taking action!”

“Look after the customer and the business will take care of itself”

If you are interested in selling or buying a franchise in the Pacific Northwest.  The members of our franchise transaction team would welcome the opportunity to meet with you.  All conversations with IBA are held in strict confidence.  All fees payable to IBA on business sales are due on project completion. Franchise buyers never pay IBA a penny.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, and accounting communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.