Franchises – What’s The Exit Strategy?

WebProNews:

The 21st century businessperson is the spawn of corporate hijinks and technological advancements in today’s global marketplace. What mattered in the past is not important now, including individual employees, whole departments, and entire processes. The new entrepreneur needs to control their own destiny, and will not place their fate in the hands of others. They will not risk Mr. Dithers handing them a pink slip. They believe that assessable risk is required to earn financial freedom. They also understand that the proper equation to assess risk includes both current profitability plus long-term asset creation.

Of course, there must also be emotional attachment to the business at hand in order to optimize value. If the plan is to grow the business to maximize value, and there is emotional commitment to that plan, the results can be dramatic. How important is emotional attachment? I’ve stayed in hundreds and hundreds of hotels, and yet I’ve never seen anyone clean the toilet in their room. There’s simply no emotional attachment to the asset. I’ve never seen anyone wash their rental car either. Nurturing, prodding, improving, adjusting, and building, all take commitment in order to be the creator of the ultimate value.

Like a baboon picking fleas, each business opportunity has to be examined carefully. The asset value of some service-based businesses will often hold value, and in fact increase in redeemable value as each new client is added to the business. The exit strategy of a retail location should include an assessment of the initial investment required, real estate values, competition, and demographic factors. The history of increases in Franchise Fees should also be considered to predict future minimum transfer value.