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ArcaMax

Getting Your Franchise to Approve a Resale

Cliff Ennico on

Editor's Note from ArcaMax: Today's edition is being re-sent because the earlier one did not have the article. Sorry about that!

"I bought a well-known franchise 12 years ago and have built my territory into a multi million dollar business.

"I decided last year to retire and sell my franchise but the franchise has thrown a number of roadblocks into the process. I had a potential buyer for my entire territory but the franchise balked at approving the sale because they said they felt the buyer was 'too entrepreneurial' and 'would have difficulty coloring within the lines.'

"I have been approached by other potential buyers but none of them can afford to pay what my entire franchise territory is worth, and the franchise is flat out refusing to subdivide my territory to make it more attractive to these potential buyers. I'm more than willing to subdivide my territory if it will make it easier to sell the whole thing over the next couple of years.

"I'm at my wit's end about what to do here. It appears that I may be the victim of my own success in realizing the fullest potential from my franchise territory."

Franchises can be wonderful investments, as long as you and the franchise agree on everything. When you and your franchise disagree, life can be a lot more complicated than it would be in a standalone business.

When you buy a franchise, you trust that the franchise management team knows more about the business than you do. Owning a franchise is exactly halfway between running your own business and working for someone else. At the end of the day, while you own your franchise territory, you don't own the business model -- you are executing someone else's model in your territory.

What has happened here (and it frequently happens) is that there is a conflict between what you think is right for your particular territory and what the franchise thinks is right for the franchise as a whole. Until that conflict is resolved, it will be difficult for you to sell your territory.

First, you need to know some basics. When you own a franchise but want out of the system, you generally have three options:

--Wait until your franchise term comes up for renewal and refuse to renew.

...continued

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