In the franchise industry, restaurant resales have long been considered a sensitive subject. Brands may perceive transfers from the system as a sign of failure, but the reality is quite different. As franchise systems mature, it is natural and expected that some transfers will occur. When managed strategically, restaurant resales serve as a crucial tool for protecting brand integrity, ensuring continued growth, and strengthening owner relationships.

Rather than being viewed as a last resort, resales should be integrated into a brand’s long-term strategy to sustain market presence and drive unit growth. 

Why Resales Matter

For franchisors, the ability to facilitate seamless ownership transitions is essential. CEOs of restaurant brands should understand that every resale is an opportunity to:

• Protect the Brand’s Reputation: A well-managed resale ensures that an outgoing franchisee is replaced by a capable and motivated owner who upholds the brand’s standards. The transition process allows brands to vet and select operators who align with their values and operational expectations, preserving brand consistency and the customer experience. Proactive franchise systems play a crucial role in supporting these transitions and guarantee comprehensive training, marketing resources, and operational guidance to new owners, ensuring a smooth handover and laying the foundation for continued success. 
• Drive Net Unit Growth: Resales keep locations operational, preventing closures that could otherwise impact consumer perception and market share. When a unit transitions smoothly, it avoids disruption to employees, customers, and overall brand presence in a given market. A well-planned resale can turn struggling units into top performers with fresh ownership, new investment, and innovative operations approaches. Rather than losing locations, brands maintain and even expand their footprint through a strategic resale approach. 
• Strengthen Franchisee Relationships: A proactive resale process reassures franchisees that their investment is protected, reinforcing confidence in the brand. Franchisees who know they have a clear exit strategy in place feel more secure in their long-term investment. This stability encourages higher engagement and performance, as franchisees are more likely to reinvest in operations, maintain higher standards, and contribute positively to the system as a whole. 

 

The Hidden Costs of Ignoring Franchise Resales

Failing to address resales could lead to significant repercussions for a brand:

• Closures: The costliest outcome for any franchisor, closures result in lost revenue, diminished brand reputation, and a negative impact on unit economics. Beyond a financial loss, closures can also affect employees, suppliers, and customers, creating instability in local markets. When franchise locations abruptly close, it can send a negative message to both consumers and prospective franchisees, making future expansions more difficult than necessary. 
• Loss of Prime Locations: When a restaurant closes, the real estate often falls into the hands of a competitor, eliminating a valuable brand asset. High-traffic locations are particularly valuable in the restaurant industry, and losing them can significantly impact a brand’s ability to compete. On the other hand, a well-managed resale ensures that these locations remain under the brand’s umbrella, preserving their market presence and potential future revenue generation. 
• Stalled Growth: If franchisees exit without a resale plan in place, unit losses can outpace new location openings, creating a net decline in the system. Without a structured approach to resales, brands will likely struggle to maintain their unit count, let alone reach target expansion goals. A proactive resale strategy ensures that every exiting franchisee is replaced seamlessly, retaining system stability and allowing for sustained growth. 
• Brand Reputation Damage: A high rate of closures can erode customer trust and franchisee confidence, making future development more challenging. Negative headlines, declining unit counts, and frequent ownership turnover without a resale plan can harm a brand’s public image. Potential investors and franchise candidates may hesitate to join a system perceived as unstable. In contrast, a transparent and structured resale strategy demonstrates a brand’s commitment to long-term success and sustainability. 

Resale Success Story

A prime example of the power of resales comes from a Moe’s Southwest Grill location that was struggling post-COVID. The original franchisee, facing pandemic-related challenges, was ready to close. However, by assisting the franchisee through a carefully managed resale, a motivated buyer took over, implemented key operational upgrades, and transformed the location into a seven-figure success. Without a resale strategy in place, this unit and its potential would have been lost. 

Franchisors must recognize the role resales play in system-wide longevity. As brands mature, franchisee transitions become more and more common. In particular, legacy brands benefit from strategic and proactive resale planning that consolidate opportunities and attract experienced multi-unit operators who can drive growth. 

A Proactive Approach 

Franchise restaurant resales are inevitable, but are still often overlooked. Proactive resale management isn’t just damage control—it’s an opportunity. Brands should integrate a resale strategy into their franchise lifecycle to minimize closers, maintain market share, and enhance FDD metrics. 

By embracing restaurant resales as a strategic asset rather than a challenge, brands can create a sustainable model for growth, protect their market presence, and ensure long-term success. They key lies in shifting the narrative. Resales aren’t a sign of failure; they’re an opportunity for renewal and continued profitability and success. 

Robin Gagnon is the co-founder and CEO of We Sell Restaurants, the nation’s largest business broker franchise focused exclusively on the sale of restaurants.