Is Franchising a Good Exit Strategy for Small Business Owners?

Lizette Pirtle — Thu, 19 Nov 2009 19:48:23 +0000

“Exit strategies” is a term often attributed to big business; but it’s as, or even more, applicable to small business owners. Are you one of those people who rather not to think of the inevitable time when you’ll get older and want to slow down? If your children aren’t going to be involved in the business, who will carry on when you want to retire? You may believe that you can sell the business when the time comes. This is a good option when there are no transition plans in place; however it’s important to consider early enough whether the value of the business is sufficient to ensure you have the retirement income and lifestyle you want.

For some small business owners, franchising may be the best investment and exit strategy vehicle to ensure the retirement they desire.

Franchising creates multiple locations that increase the value of the business.
Franchising creates a network of distribution that can be used by others making it an appealing acquisition prospect for many companies.
Franchising directs the business owner to more “big picture” thinking patterns and away from the worries of the daily operation of a single location. This new emphasis inevitably results in increased value.

However, you need to understand that franchising doesn’t create an increase in value overnight. It takes time to grow a network of franchisees. There is also the initial investment to develop the systems, comply with federal and state regulations as well as to recruit, train and support franchisees. As franchises are sold and the network grows this initial investment is recouped, yet franchising is not easy and should be considered carefully.

Franchising a business changes the nature of the activities you, as the owner, perform. In other words, when you franchise, you change your business; you become a franchisor and your main activities are the recruiting, supporting and training of franchisees as well as the protection of the brand and innovation. Not everyone is suited for this type of transformation. But if you are willing to embrace change, franchising is a rewarding method of increasing the value of your business and its appeal to buyers in the future thus becoming a viable and profitable exit strategy when the time to work less and enjoy more comes.

Client Reaches Exit Strategy Objectives

Lizette Pirtle — Wed, 03 Sep 2008 20:54:12 +0000

In 1998 Hylton Rabinowitz and David Buxton, owners of NWJ Jewelers in South Africa, had several company owned locations and had an overwhelming desire to grow. Hylton and David chose franchising and our company to take them through this expansion process. They wanted to create a company with 100 locations that could provide business ownership opportunities and jobs to the people who were entering the market after years of apartheid. They also wanted to be able to retire in their 50s.

After we finished franchising NWJ, Hylton and David worked hard to grow a company of high standards and ethics. Every year they added more locations in Southern Africa and have reached their locations goals. Beginning in the year 2000, NWJ has been recognized by many organizations, specifically being named Franchisor of the Year by FASA (Franchise Association of Southern Africa).

This summer, Hylton and David sold NWJ to the South African Public Company Taste Holdings PTY (LTD). Although they continue working and managing NWJ, they have the ability to retire anytime. They have achieved all what they set out to do. We are very proud of them and feel honored to have assisted them at the beginning of their journey.

Small Biz Franchise Blog » Exit Strategies

Is Franchising a Good Exit Strategy for Small Business Owners?

Client Reaches Exit Strategy Objectives