If you’re building a business, you might be hoping to run it for a very long time. On the other hand, life can be surprising, and you might need to sell the business for any number of reasons in the future. Or perhaps your plan is to build and sell right from the beginning.
Whatever the case, a business is a significant asset, so it makes sense to consider potential resale value before even diving into the venture.
You might be interested to learn that a study from Palm Beach Atlantic University’s Rinker School of Business demonstrated that franchise businesses command a higher price on the market than non-franchise businesses.
The team of faculty researchers examined 2,159 business resales spanning over a decade. The data showed that franchise businesses sold, on average, for 1.5 times the price of non-franchise businesses. Among all sales, food and restaurant businesses fared better than other personal and professional small business categories.
The study, titled “Determinants Impacting Resale Premium Disparity When Selling a Small Business: A Predictive Non-Linear Approach” will be published in this fall’s issue of Journal of Business and Economic Studies.
Dr John P Hayes, one of the authors of the study, reiterated this point: “If two people operate the same type of business over a period of years and enjoy similar sales, the franchise business is more likely to sell at a higher price point. Business owners ought to be aware of that information in advance of launching a business.”
Recognized advantages of a franchise resale include:
- A proven track record that helps to predict revenue accurately
- The physical location has already been developed and completed
- The business has already gained regular customers
- A workforce and supply network is already established
- The franchisor provides marketing, materials ordering, troubleshooting help, and support on other topics
- Cash flow has already been established
- All the stress of building a business and working through low initial revenues is avoided
It’s easy to see why franchise businesses resale at significantly higher values. So what are you waiting for? Give us a call today to learn more about how Parlay Cafe fits into your overall business development plans.