Why Franchisors Are Obsessed With Exits... ...Before They've Even Begun!

In most businesses, planning your exit before you start sounds like madness. In franchising, it's the norm - and for good reason. Since 1977, the BFA has championed ethical business practices and high standards in franchising; we work hard to ensure franchisees choose the right franchise for them, which often means franchisors asking why they want to invest and what their end goal is. Do they want to sell it, hand it over to their children or keep it until they retire? A franchisee's end destination will help the franchisor determine the route they take, what their priorities are for the business, and when and how they take action.

Know your destination
When talking to franchisors, and even before you've settled on your dream franchise, be ready to answer the question "Where do you want your business to be in five years?"

Plan the path
Jo White and husband Ryan, head up the pet care franchise We Love Pets, whose franchisees manage teams of staff who provide dog sitting, pet feeding and home boarding. Jo says: "We always tell potential franchisees to consider their exit strategy, even before they invest in our franchise. Your intention changes the way you run your franchise, your growth targets, and the decisions you make."

Imogen Clarke, Head of Franchise Development at home care franchise Home Instead, says: "We always put the 'exit goals' question to prospective franchisees. Many say that they were not considering an exit strategy when they joined."

About franchising
The UK has more than 1,000 franchise systems, according to the latest British Franchise Journal sponsored by NIC local. Franchise agreements typically last five to ten years.

When goals shift
She adds: "Few people have a clear goal, such as owning a business for 12 years and selling when the revenue or business performance gets to x amount. We explain that it's important for us to understand their overall goals so we can help them achieve them, and for them to understand what they want from buying a business."

What if exit plans change?
Franchise development managers commonly raise this with franchisees in business development calls. Tracey Alexander, who has been the We Love Pets franchisee for Reading, says her exit plans could change in the future. "My eight-year-old son William might take over the business, but it's too soon to consider that seriously. In the future I could sell off some parts of my area and operate a smaller territory myself."

Time to prepare
Jo adds: "We ask franchisees selling to give us two years' notice, so there's time to build up the business in ways that enhance its attraction for buyers." At Home Instead, Imogen says: "The most unusual exit goal I've heard is someone who wanted to own a business for x amount of time, so at some point they'd be able to set up a Home Instead franchise in the US."

Plot twist
Goals can change fast. Jo says: "You can have people wanting to invest in multiple units, but in a matter of months perhaps they've had a health scare or they've welcomed their first grandchild and now they want to sell."

Coaching through change
However, she says: "Sometimes franchisees suddenly decide to exit and it appears to come from nowhere. It's rare but we tread carefully, to ensure this isn't an impulsive decision based on something that will be short term pain, perhaps in their personal life. We can have open conversations to check if that's something they're ready for right now." The BFA can help you through each step from franchise choice to exit. Our strapline, 'Discover Your Tomorrow,' reflects our commitment to helping new franchisees take their first step towards a successful business future. Consider us your 'friend in franchising' and if you can't find the answer on our website, call us, we're here to help.

Family legacies
"We didn't specifically think about exit when we bought our business. We were more focused on growth, though that ultimately prepares you for exit," says Stuart Hart, the Home Instead franchisee for Ruislip and Harrow. "We wanted to deliver high quality care and Home Instead's model enabled us to deliver that to clients as well as building a business. "We are doing that, but now our son has joined us in the business and will become our General Manager soon. We are now focused on creating a legacy for him as well as expanding. We'd love to own multiple businesses with Home Instead, and that's our strategy."

The best way to start a franchise is to know how you'll leave it; visit our website www.thebfa.org for more advice on investing in a franchise business.