Happy March! The warm weather is just around the corner ... spring and summer are times when homeowners think it may be a good time to list their homes for sale or to jump to that new home. (Is this a real estate blog? ...wait for it ... I'll make the connection to franchising in a minute)
Of course the answer depends on whether it is being sold by the franchisor as a new franchise or by a franchisee who is cashing out after establishing and operating the business over a period of years. Either way wouldn't it be helpful to know the "market value"?
Now this type of analysis is above my pay grade but here are a few suggestions (in no particular order):
- Contact a Business Broker to see if they can help, especially for franchisees planning to list and sell. There are plenty of franchise brokers out there who are eager to give you a listing price;
- Visit with your Certified Public Accountant, especially if they have been handling your business affairs;
- Get a copy of the Business Reference Guide - a bit pricey at $155.00 but it has a wealth of information about business valuations, including popular franchises, and provides Rules of Thumb that will at least give you a starting point;
- Hire an appraiser - check out the Institute of Business Appraisers and the American Society of Appraisers for more information and to find a qualified appraiser;
- Ask franchisees who recently sold their business or ask a recent buyer from an established former franchisee - they may be listed in Item 20 of the Franchise Disclosure Document if the sale was within the last year before the date of the FDD;
- Finally, although the franchisor may be reluctant to provide historical re-sale info (due to various franchise laws and regs), you may want to ask anyway and see what you get.
These are just a few ideas - the important point is to get some idea of VALUE before you leap!