As much to know: it is not enough to be a candidate for the acquisition of a franchise to become the lucky one. To get the business of your dreams, you will not only have to convince the seller, but also the brand, which has a right of inspection (in short: veto) over the buyer. You must therefore prove to him that you have the ideal profile before signing a new contract.
To know if the takeover of the company promises to be profitable, a certain number of points of vigilance are essential. First of all, ask for all the accounting documents for the operation. “You will have to examine the strengths and weaknesses of the company with a magnifying glass: its level of activity, possible legal risks, balance sheets and income statements, stocks, contracts, human resources…”, recommends Stéphanie di Fusco, national director of the franchise and trade market of the firm In Extenso Opérationnel. You also need to consider the influence of the sign. In fast food, the customer comes first and foremost for the brand and not for the person who embodies it. “In this case, the transfer is quite simple. For a hairdressing salon, on the other hand, the buyer has an interest in working in tandem with the transferor to ensure the transfer of the clientele”, she illustrates.
Also note that some networks do not like seller-buyer pairs, because they believe that the first may, over time, have lost some of its know-how and therefore risks transmitting bad habits. “Some offer longer initial training in the event of takeover than creation. They believe that by recovering a business that is going well, the new franchisee must immediately be operational and take their marks quickly”, underlines Stéphanie di Fusco.
There remains the crucial question of the amount and, in this area, there are only special cases. Be aware, however, that the value of a company does not necessarily correspond to the market price. It all depends on supply and demand in the territory, the level of competition and, of course, the performance of the point of sale during the takeover. If the profitability is real, it is not so serious to spend a large sum, even if it means repaying high loans. On the other hand, if the store lives on, it will certainly be more easily accessible, but you will have to struggle more to make a profit…
“Less energy at start-up”
It was in October 2020 that Julien Rouyre, a quadra already franchised Babychou Services in Lyon, decided to buy a company from the same network specializing in childcare, located in another sector of the metropolis. “I wanted to develop and I said to myself that a recovery was better than a second creation. The business was already turning. Suddenly, it was going to require me less energy at the start”, he recalls.
The ceding company provides him with a price range. “I opted for the lowest rate, but, in hindsight, I could have negotiated a little more because the company was not in good financial health. But I knew the deal still had potential and that the area was not exploited to its fullest. So, I took over everything: debts, assets, receivables, staff, approval…”
On the franchise side, he is negotiating a new 7-year contract with the brand. Two and a half years later, he has won his bet. He almost doubled the turnover of his second small business (299,000 euros in 2022 against 178,000 euros in 2019). “I activated certain levers that did not exist in the past, for example by recruiting work-study childcare workers. This allowed me to find new candidates in a particularly tight job market”. Julien Rouyre emphasizes that he has above all applied the concept of the network to the letter. The BA-BA of the trade.
An article from the Franchise special issue of L’Express. On sale since March 16.