One of the common questions people ask before investing in a franchise is whether they can sell the business in the future. The simple answer is yes, in most cases a franchisee can sell their franchise. However, the process is not the same as selling an independent business. In the UK, franchise resales are common, but they must follow the terms set out in the franchise agreement.

Understanding how franchise resales work is important for anyone considering long-term business ownership.

Understanding Ownership in a Franchise

Although a franchisee operates under a franchisor’s brand, they usually own their individual business. This means they can build value over time and potentially sell that business later.

In the UK, franchisees are typically self-employed business owners running their own limited company or sole trader operation. However, they do not own the brand or intellectual property. They have the right to use the brand under licence, according to the franchise agreement.

This licence is what makes selling a franchise different from selling an independent company.

The Role of the Franchise Agreement

The franchise agreement is the key document that outlines whether and how a franchise can be sold. Most UK franchise agreements allow resale, but only with the franchisor’s approval.

The franchisor usually has the right to review and approve the buyer. This ensures that the new franchisee meets the brand’s standards and financial requirements. The franchisor may also charge a resale or transfer fee as part of the process.

Before investing, it is always wise to ask about the resale terms and have a specialist franchise solicitor review the agreement.

Why Franchise Resales Happen

There are many reasons why a franchisee might choose to sell. Some owners retire, while others move on to new opportunities. In some cases, franchisees may decide the business no longer fits their lifestyle.

In the UK, franchise resales can be attractive to buyers because the business is already established. It may have an existing customer base, trained staff, and trading history. This can reduce the risk compared to starting a brand-new franchise.

For the seller, a successful resale can provide a return on their initial investment.

The Resale Process

Selling a franchise usually involves several stages. First, the franchisee will inform the franchisor of their intention to sell. The franchisor may offer guidance or even help market the business to suitable candidates.

The business is then valued, often with the help of an accountant or business adviser. Factors such as profitability, location, and remaining term on the franchise agreement will influence the price.

Once a buyer is found, they must go through the franchisor’s recruitment and approval process. In the UK, this may include interviews, financial checks, and training requirements. Only after approval can the sale complete.

What Buyers Should Consider

For buyers, purchasing a resale franchise means reviewing both the business performance and the franchise agreement. It is important to understand why the current owner is selling and whether the business is performing as expected.

Professional advice from a solicitor and accountant experienced in UK franchising is essential. This ensures the buyer fully understands the terms and financial position before committing.

Conclusion

Yes, a franchisee can usually sell their franchise, but the process is guided by the franchise agreement and requires franchisor approval. In the UK, franchise resales are common and can offer benefits to both sellers and buyers. However, clear communication, proper valuation, and professional advice are key to ensuring a smooth and successful transaction. For anyone considering franchising, understanding the resale process is an important part of long-term planning.