You’re looking at franchise business as a new beginning, so why think about the end? It seems counterintuitive, but having an end game in mind when you start makes sense. Chances are, you’re excited about being a business owner, earning money, and building your profitable franchise. But what if there comes a time when you want out of your successful franchise? Thinking about the end of the franchise can influence your choices at the beginning.
Choosing a successor, whether a single unit or a multi-unit franchise, is important for protecting the assets you invest in your franchise. Franchisors typically have rules in your franchise contract that stipulate what you can and can’t do to pass on a franchise to a successor, whether it’s a family member, business partner, or a third-party to whom you’re selling the franchise. This is another place where a franchise attorney can be helpful — especially one who’s experienced in estate planning with franchises.
As part of your estate, your franchise is an asset that you want to pass on to your family members or business partners, either to keep operating as the franchisees or hiring a principal operator. When you’re talking with your family about your plans to open a franchise, make sure to discuss whether they would like to own a franchise themselves and what they would do in the event you were no longer able to run the franchise business. Knowing from the start what your family’s intentions are can give you direction in what you need to do with your estate.
If you’re going into partnership with other people in your franchise, make sure to speak with an attorney about business planning techniques. You’ll need to ensure that the franchise remains part of the business’s assets should one member of your business no longer be able to operate the franchise.
Franchisors have specific rules for permissible transfers of the franchise so make sure to consider these if you plan on selling your successful franchise to a third-party. These rules vary from franchisor to franchisor but you’ll want to look for options where you can sell the franchise if you no longer wish to operate it.
All in all, planning for what happens when you no longer want to or can’t operate your franchise should have a big impact on your franchise selection process.