How to Exit Your Restaurant Franchise - Strategies for Success

Posted by Robin Gagnon on Mar 14, 2023 12:53:13 PM


As a franchise restaurant owner, you have invested significant time, effort, and resources into owning and operating a successful business. While it is important to focus on growth and profitability, it is equally important to plan for the future and have an exit strategy in place for your restaurant franchise

Why you Need an Exit Strategy

Plan for the unexpected - One of the most important reasons to have an exit strategy is to plan for the unexpected. No matter how successful your restaurant franchise may be, there are always risks and uncertainties that could impact your business. This could include changes in the industry, economic downturns, or even personal circumstances such as health issues or family emergencies. For instance, a drastic life change may affect your ability to run the business profitably.

It is not unusual to experience lifestyle changes that can include growth in your family, caring for an aging parent, or experiencing an unforeseen health situation. Having an exit strategy in place ensures you are prepared to deal with these unforeseen events. Many Americans are currently struggling with the so-called "sandwich generation", a scenario where they are dealing with both children on the one hand and the needs of aging parents on the other. A clear strategy allows for the investment you made in your restaurant franchise to create a capital event and fund your next steps if lifestyle needs dictate that you make a change in your own life.

Maximize your return on investment - Another key benefit of an exit strategy is to maximize your return on investment. Those long ago dollars invested should be part of your retirement plan, paying off to fund the future. Whether you sell your franchise externally or even sell it to family members, there may be unintended tax consequences to understand. An exit strategy for your restaurant franchise helps you minimize any tax liabilities and maximize your earnings.  A Certified Restaurant Broker can refer you to CPA's and accountants who specialize in tax events including the sale or gift of a business.

An exit strategy may not mean an immediate sale. It could be a consultation with a Certified Restaurant Broker that results in a plan to increase profits, implement cost-cutting measures, or even expand your restaurant franchise to new locations. Then, when you are ready to retire or begin divesting your portfolio, your units are ready to generate cash for your family. 

Maintain control of your business - Having an exit strategy helps you maintain control of your business. Without a plan, you could be forced to make hasty decisions or even sell your business at a lower price than you would like. An exit strategy helps you to sell when you want to, not when you have to.

Protect your legacy - For many franchise restaurant owners, their business is more than just a way to make money - it is a legacy that they want to pass on to future generations. Having an exit strategy in place for your restaurant franchise can help you protect that legacy and ensure that your business continues to thrive long after you are gone. This may include developing a succession plan, training your employees to take over key roles, or even passing on ownership of your franchise to family members.

How to Exit Your Food Franchise Business

The key to a successful exit is finding a trusted resource like We Sell Restaurants who has experience transferring franchise restaurants for sale in the marketplace. You need someone with experience selling many franchise restaurants that understands how to accurately value a restaurant business. In addition, they must be able to quantify the steps it takes to list, market, qualify a buyer, and ultimately transfer the unit. When working with a Certified Restaurant Broker® for example, you will be guided through 10 basic steps:

  1. Pull Data - Pull key items together including two years of tax returns, most recent P&L, POS reports, and more.
  2. Review Data - Read materials from Step 1 as if you are a buyer seeing them for the first time. Do your numbers match and make sense?
  3. Brainstorm - Think of ways that a new buyer could improve your business. Whether you sell or not, this step should identify areas for improvement.
  4. Know the Math - Restaurant valuation is a math problem with a right and wrong answer. Take time to understand the valuation process.
  5. Hire - Interview restaurant brokers to find who can sell your restaurant for the most money in shortest time.
  6. Market - Attract buyers to your business with confidentiality, and qualify buyers before revealing details.
  7. Accept an Offer - After you receive a written offer and escrow check, review, counter, and make sure you know who is responsible for closing tasks.
  8. Complete Due Diligence - This is where buyers will dig into everything about your business. A strong restaurant broker will control this process and act as the conduit for info.
  9. Complete Approvals - After accepting an offer and completing Due Diligence, the buyer will need to be approved by the franchise brand.
  10. Close the Deal! Participate in weekly calls with the restaurant broker and buyer and close the deal!


Find Out If Your Brand has a Preferred Franchise Resale Resource

Research qualified restaurant brokers on your own in addition to asking your franchisor if they have a preferred resale specialist. We recommend trusting your franchise resale to specialist like We Sell Restaurants. We Sell Restaurants has partnered with several brands to provide restaurant franchisees the tools they need to transfer their unit and exit the business successfully. 

See brands we have sold

The best time to plan your exit strategy is from day one of the business acquisition. Connect with an franchise resale expert at We Sell Restaurants to learn more about exiting your franchise restaurant business successfully. 

Download the Free Guide to Franchise Resales

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Robin Gagnon, Certified Restaurant Broker®, MBA, CBI, CFE, is the co-founder of We Sell Restaurants, a brand that has carved an unparalleled niche in the industry as the nation's leading and only business broker franchise focused on restaurants. Under Robin’s leadership, We Sell Restaurants has grown to 45 states where it dominates the restaurant for sale marketplace, including franchise resales, delivering on the founder’s vision to Sell More Restaurants Than Anyone Else. We Sell Restaurants was named one of the most influential suppliers and vendors in the country by Nation’s Restaurant News and has earned a position on INC 5000’s list of fastest growing privately held companies. Franchisees of We Sell Restaurants surveyed by Franchise Business Review placed it 25th in the nation in franchisee satisfaction.

Robin is the Chair of the Women’s Franchise Committee of IFA and is a member of the IFA Board of Directors. She is also an MBA and Certified Franchise Executive (CFE) and has her CBI (Certified Business Intermediary) designation from the International Business Brokers Association. She co-authored Appetite for Acquisition, a small business book award winner in 2012 and contributes frequently to industry press appearing in Forbes, QSR, Modern Restaurant Management, Franchise Update, and others. Entrepreneur has named her to their list of the “Top Influential Women in Franchising.”

Topics: Selling a Restaurant, Restaurant Franchise Resales

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