Building A Valuable Franchise

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July 23rd Breakout Session at ServiceMaster International Conference, Boston, MA. presented by Glen Cooper, President of Maine Business Brokers. The subtitle is \'Planning for the Day You Will Sell."

July 23rd Breakout Session at ServiceMaster International Conference, Boston, MA. presented by Glen Cooper, President of Maine Business Brokers. The subtitle is \'Planning for the Day You Will Sell."

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  • 1. Building A Valuable Franchise Planning For The Day You Will Sell Glen J. Cooper, CBI, CBA, BVAL President, Maine Business Brokers 217 Commercial Street, Suite 401 • Post Office Box 7346 Portland, Maine 04112-7346 www.MaineBusinessBrokers.com
  • 2. How Do You Build A Valuable Franchise? 5 Essential Skills Concentration – own your place in the market Discrimination – focus attention on intention Organization – work, space, time, not people Innovation – faster, cheaper, better Communication – touch people with the Wow! 4 Ways People Want the Wow! Visual - color, form, scale, order, detail and information Emotional – experience order, feel heard, connect with something bigger, with a purpose, morally right, feel that what they do is important, bonded with a team they love Functional – promises fulfilled Financial – worth it – integrity of value received
  • 3. “E-Myth” Definition: The E-Myth is the myth that those who start businesses are “entrepreneurs.” Gerber says that, instead, they are “technicians suffering from an entrepreneurial seizure.” They know how to work “in” their business, but not “on” it.
  • 4. 5 Essential Leader Skills: 1) Concentration – own your place in the market. 2) Discrimination – focus attention on your intention. 3) Organization – manage work, space, and time, but not people 4) Innovation – do it faster, cheaper, and better. 5) Communication – touch people with a Wow!
  • 5. 4 Ways to Wow People: 1) Visual - color, form, scale, order, detail and information 2) Emotional – experience order, feel heard, connect with something bigger, with a purpose, morally right, feel that what they do is important, bonded with a team they love 3) Functional – promises fulfilled 4) Financial – worth it – integrity of value received
  • 6. How Do You Plan For the Day You Will Sell?
  • 7. Market Facts: • Only 2% of buyer prospects ever buy! 98% never do! • There’s an 80% chance you won’t sell! Only 20% sell in the first year. • Enjoy the Rollercoaster Ride! Or, hire a professional team.
  • 8. Breakout Session Agenda: • What’s my franchise worth? • How do I keep it confidential? • What’s the best way to sell? • How do I screen and qualify prospects? • Who should I handle the negotiation? • How long is this going to take?
  • 9. What’s It Worth?
  • 10. What’s It Worth? • Who might buy it? • Why would they buy it? • When would they buy it? • What can be financed? • Is there a “rule of thumb”? • What counts besides profits?
  • 11. Who might buy it? An in-experienced outsider? An experienced outsider? Another franchisee?
  • 12. Why would they buy it? A job? A lifestyle? A good investment?
  • 13. When would they buy it? Tomorrow? In a year or two? When it makes money?
  • 14. What can be financed? Tangible assets being sold? Buyer’s tangible assets? Intangible assets?
  • 15. Pricing rule of thumb? 1.5 – 3.5 SDE? 60% of annual revenues? +/- 50 other factors?
  • 16. What counts besides profits? Location & market dominance? People & systems? Stability & good books? Terms of sale?
  • 17. Who Should I Tell?
  • 18. Who Should I Tell? • Who knows already? • Why keep it a secret? • I have to give them what?! • Why do buyers need to know so much? • What shouldn’t I tell them? • What if my people find out?
  • 19. Who knows already? Owner’s family & friends? Owner’s advisors? Key employees?
  • 20. Why keep it a secret? Key employees will leave? Referral sources dry up? Customers? Shopworn factor.
  • 21. I have to give them what!? Formal memorandum? Due diligence help? Face time!
  • 22. Why do they need so much? They’re not you! Buyer advisors insist! They were born at night, but not last night!
  • 23. What shouldn’t I tell them? Personal/employee details! Competitive secrets! What you’re doing wrong!
  • 24. What if my people find out? Damage control plan? Marketing plan change? Timing change? Price/terms change?
  • 25. How Do I Tell the Story?
  • 26. How Do I Tell The Story? • How should I present it? • Where should I advertise? • What should the ads say? • How do I give buyers a tour? • How should I answer questions? • How do I follow-up?
  • 27. How should I present it? Disclosure Document (FDD)? Offering summary? Narrative history? Financials?
  • 28. Where should I advertise? With the franchise? At least 6 major multi-lists? Print media? Direct mail?
  • 29. What should the ads say? Specific for response? Include, don’t exclude? Active voice? Contact us today!
  • 30. How do I give a tour? Set an agenda? Start with the end in mind? Plan “rest stops”? Plan your follow-up?
  • 31. How to answer questions? Rephrase questions? Answer only what is asked? Stay “on message”! Ask your OWN questions?
  • 32. How do I follow-up? Create the expectation? Don’t let time go by? Always add news? Create & follow a process?
  • 33. How Do I Screen Buyers?
  • 34. How Do I Screen Buyers? • How do I handle buyer inquiries? • How do I know they’re qualified? • What should I expect from them? • What should I give them? • How much time should I give them? • When do I ask for the offer?
  • 35. How do I handle inquiries? Expect 50/1 Inquirers/Buyer? Get ready for them? Make inquiring easy? Make qualifying hard?
  • 36. How do I qualify them? Ask for confidentiality? Ask for financials? Ask for résumé? Ask about timing? Follow franchise!
  • 37. What should I expect? Expect disclosure? Contact Franchisor? Expect “show up?” Expect questions? Expect indecision?
  • 38. What should I give them? Narrative Description? Financial Data? Equipment List? Photos? Tour &Meeting?
  • 39. How much time to give? Two hour initial meeting? Two hour tour & 2nd meeting? Many hours of Q&A? 6 months to decide?
  • 40. When do I ask for the offer? Maybe you shouldn’t? Before “due diligence”? When you said you would? According to your set agenda?
  • 41. What Do I Do Next? • How do I handle offers? • When do I call my attorney? • When do I call my CPA? • How long is this going to take? • When do I tell my people? • What if the buyer backs out?
  • 42. How do I handle offers? Organize your team? Time is of the essence? Verbal offers at first? Letter of intent? P&S at the end.
  • 43. When do I call my attorney? Before the offer? After an offer? After acceptance? Before closing? After closing?
  • 44. When do I call my CPA? Before I set the price? Before the offering? Before an offer? After an offer? Before taxes are due?
  • 45. How long is this process? 12 months to get ready? 24 months on the market? 6 months negotiating? 4 months closing? 3 months in transition?
  • 46. When do I tell my people? Before you offer it to others? After you’re on the market? When you accept an offer? After P&S signed? After closing?
  • 47. What if buyer backs out? Try this buyer one more time? Put it back on the market? Pull it off the market? Breathe, re-group & re-think? Close & go home?
  • 48. How Do You Build A Valuable Franchise? 5 Essential Skills Concentration – own your place Discrimination – focus attention on intention Organization – work, space, time, not people Innovation – faster, cheaper, better Communication – touch people with the Wow! 4 Ways People Want the Wow! Visual - color, form, scale, order, detail and information Emotional – experience order, feel heard, connect with something bigger, with a purpose, morally right, feel that what they do is important, bonded with a team they love Functional – promises fulfilled Financial – worth it – integrity of value received
  • 49. How Do You Plan For the Day You Will Sell?
  • 50. What’s It Worth?
  • 51. Who Should I Tell?
  • 52. How Do I Tell the Story?
  • 53. How Do I Screen Buyers?