I’ve gotten several questions on the differences between selling a franchise HVAC business and one that you’ve built yourself. The principles of selling the two kinds of companies are the same, but the pool of buyers will be different. Here’s what you need to know.
The key factor in getting full price for your business is getting it in front of as many serious buyers as you can. The only way to truly understand its market value is to get more than one offer. So it’s important to understand where you’re most likely to find buyers.
The first pool of buyers will likely be in the franchise network. Working with the franchisor, you’ll be able to discover other franchisees who may be ready to expand. They may be wanting to grow within your region, or they may be from another part of the country or state, ready for an acquisition that gets them a toehold in your market.
These are attractive prospects; they have experience with the brand and the company’s procedures, and the change of ownership shouldn’t be disruptive for your employees or customers. It’s an easy transition. The buyer will understand (and for the most part, share) your business model, so you’ll have less education to do as you negotiate a deal. You’ll also have the support of your franchisor in finding and vetting potential buyers.
The second pool of buyers are first-time or less-experienced entrepreneurs. They may be transitioning from a corporate or military career. They may be fulfilling a dream of owning their own business for the first time. They may have had some experience running a business, but perhaps not in your industry.
Franchises are very attractive to these buyers; they appreciate the support and brand recognition a franchise gives them, knowing it would take much longer to build a brand on their own. They also appreciate the structure a franchise provides; the company has a track record of success and processes that work. A new owner doesn’t have to use trial and error to get traction and become profitable.
Again, your franchisor may have some leads for you, but these buyers may be a little harder to find, since they might not have a clear idea about what kind of business they want to own. They’ll also have a longer learning curve if they have no direct HVAC experience, and will probably need to go through the licensing and certification process. You’ll also need to get the approval of the franchisor, which will have veto power over the sale.
The only downside to selling a franchise is that you may be unable to access one of the most attractive pool of buyers: owners of other HVAC companies. This is a group of prospects with experience, financial means, and a thirst for growth. But they may be ineligible to buy your franchise. Most franchise agreements will never allow an owner to operate two competing brands in the same market. So these buyers cannot acquire your company, no matter how good a fit they are.
You can be successful in selling your franchise, and you can get a great offer that meets your expectations. You just have to understand where your prospective buyers are coming from and figure out how to get your company in front of as many of them as possible.