Sell a franchise location in Texas
If you own a franchised unit, selling it is not the same as selling an independent business. The franchisor approves the buyer, the franchise agreement sets the terms, and the buyer pool is shaped by the brand. This page is for owners weighing that path against an independent sale, and for owners of both franchised and independent businesses deciding how to sell each.
For the transfer process itself, including Item 17, the right of first refusal, and transfer fees, read our guide on how to sell your franchise.
What buyers of a franchise location look at first
Franchise resale buyers look at the unit and the brand together.
Remaining term
How many years are left on the franchise agreement, and what renewal requires.
Brand health
How the system is doing, which the buyer researches in the brand's current FDD and through calls with other owners.
Unit performance
The unit's own results, separate from what the system reports.
Required upgrades
Remodels, equipment, or technology the franchisor will require at transfer or renewal.
Territory
What the franchise agreement grants the unit and where other units are.
Franchisor approval
The buyer qualifications the franchisor will apply.
Records to prepare for a franchise location sale
In addition to the unit's financials, gather the franchise documents a buyer will review. The general document list is on our how to sell a business guide.
Franchise agreement and amendments
The full agreement, including transfer, renewal, and post term provisions.
Royalty and fund statements
What the unit has paid and any amounts owed.
Franchisor reports
Unit level reports the franchisor provides, if you may share them.
Compliance and inspection history
Brand audits and any notices of default.
Lease
Including any rights the franchisor holds under the lease.
How franchise location earnings are measured
A single franchised unit run by its owner is usually measured on SDE, after royalties and brand fund contributions, since those continue under a new owner. Multi unit groups with managers are more often measured on EBITDA.
Buyers also adjust for costs the franchisor will require, such as a remodel at transfer or renewal, because those reduce what the buyer can pay.
Franchise location add backs that need documentation
- Owner salary above the cost of a unit manager
- Personal expenses paid by the unit
- One time costs such as an earlier remodel or a legal matter
- Family members paid but not working in the unit
Approvals and licenses for a franchise location
The franchisor's approval is the central approval in a franchise sale, and the franchise agreement sets the conditions. Licenses and permits depend on the type of business: a franchised restaurant, salon, or home care unit carries the same state licensing questions as an independent one, covered on the pages for those industries. Your franchise attorney should review the agreement before you choose a path.
Franchise resale or independent sale: how they compare
Some owners ask whether they could leave the system and sell the business on its own. Most franchise agreements restrict what an owner may do after the agreement ends, including operating a competing business at the same location, so an independent sale of a franchised unit usually is not available while the agreement is in force. Read the post term provisions with your attorney before assuming otherwise.
Where both paths are possible, as with an owner who has franchised and independent businesses, the comparison looks like this.
Who approves the buyer
Resale: the franchisor, under the franchise agreement. Independent: you, and any landlord or lender whose consent is needed.
Who buys
Resale: buyers who want that brand, often including existing franchisees. Independent: any buyer who fits the business.
Costs at transfer
Resale: transfer fees and required upgrades set by the franchisor. Independent: no franchisor costs.
What the buyer gets
Resale: the brand, systems, and support for the remaining term. Independent: the business as it stands.
Information buyers see
Resale: the unit's records plus the brand's FDD. Independent: the business's records alone.
Timing
Resale: depends partly on the franchisor's approval process. Independent: depends on the buyer, lender, and diligence.
Keeping a franchise location sale confidential
The franchisor, other franchisees, and your staff all have an interest in a sale.
- Check whether your agreement requires notice to the franchisor before marketing the unit.
- Other franchisees in the system may be buyers. Screen them like any buyer.
- Staff hear about the sale late, once the buyer and franchisor are aligned.
- Brand marketing materials may not be usable in a sale without the franchisor's permission.
Pricing a franchise location
Buyers price a franchised unit on its earnings after royalties, the remaining term, the brand's condition, and the cost of any upgrades the franchisor will require.
Forge prepares a broker opinion of value from the recast earnings, the condition of the assets, the risks a buyer would take on, and market evidence. A broker opinion of value is not a certified appraisal and is not a substitute for one. If a lender, a partner, or a court needs a formal appraisal, that is a separate engagement with a credentialed appraiser. Our business valuation page explains how the opinion is built.
Questions from franchise owners
Can I sell my franchise location as an independent business?
Usually not while the franchise agreement is in force. Most agreements restrict operating a competing business after the agreement ends. Have your franchise attorney review the post term provisions.
Who are the usual buyers for a franchise location?
Buyers who want that brand, including existing franchisees in the system. The franchisor must approve the buyer.
How is this page different from the sell your franchise guide?
This page compares a franchise resale with an independent sale and explains what buyers of a unit review. The sell your franchise guide covers the transfer process step by step.
Do I need the franchisor's permission to start marketing my unit?
Check your agreement. Some require notice or approval before a unit is marketed, and some restrict use of the brand in sale materials.
What if I own both franchised and independent businesses?
They are usually sold separately or packaged with care, since only the franchised unit needs franchisor approval. Forge can help you decide how to approach each.
Talk to Forge about selling your franchise location
Inquiries are confidential. Financial documents come later, after a confidentiality agreement is in place.
Related pages
Thinking about selling your franchise location?
Start with a confidential conversation about your agreement, your unit, and your timing.