Franchising just like any other business has its share of loss and profits. Re-selling often associated with an unsuccessful business is turning out to be a profitable venture for the aspiring entrepreneurs. Explore more of it
A franchise re-sale takes place when an existing franchisee wishes to sell their franchise to the new franchisees. Re-selling can take place for many reasons. Though the franchisor owns the brand and is the brain behind the brand but as franchisee has signed a franchise agreement and has taken up the franchise in lieu of franchise fee so he has all the rights to re-sell it. Thus, the franchisee has the right to re-sell his business if he wants to earn the capital value of it. However, this process needs the permission of the franchisor as well.
With franchising being the most successful and profitable mode for starting a business, more and more entrepreneurs are joining the bandwagon. Therefore, the process of franchise re-sale offers excellent opportunity to other aspirants as well. Once all the territories of a franchised network have been allocated, the only way for a prospective franchisee to join is by buying an existing business from a franchisee.
Factors attributing to re-sale
There are many factors that can lead an old franchisee or a franchisor to think about re-selling. A few have been discussed below:
Franchisor’s role in re-sale
When the old franchisee voices his opinion of re-selling the business, the franchisor must be involved in the process to some extend. It is the franchisor’s duty to manage the new franchisee’s expectations from the beginning. Franchisors must also be aware of the areas in which the prospective franchisee would need his advice or experience. Instead of separating themselves from the re-sale process, the franchisors should take an active part in it. They should do more than just approving the new franchisee.
Benefits of re-sale
Earlier the concept of franchise re-sale was seen as a negative process, particularly by the franchisors. Many considered that re-sale is often the outcome of a failed business or a discontented franchisee opting out of the network. However, with time the concept of re-selling is gaining wide acceptability with more and more numbers of re-selling taking place. Given below are the advantages of this process:
Parties involved in re-sale
The three parties which are actively involved in this process are the old franchisee, new franchisee and the franchisor. Therefore, consideration must be given to all three parties:
To conclude, it can be said that re-selling of a unit can be advantageous to all the three parties involved. Further, re-selling is also profitable for the aspiring franchisees, as it has already gained its popularity among the customers.