Franchise succession planning or exit strategy

What does franchise succession planning and exit strategy mean and why is it of cardinal importance to franchisors and franchisees alike?

There is a misconception that succession planning and an exit strategy are one and the same thing. This is certainly not the case as can be seen from the following definitions:

Succession planning is the process of identifying successors within a franchise and providing them with an opportunity to develop their skills and experience in order to replace the existing leaders of the franchise at a future date to ensure business continuity.

Exit strategy refers to a franchisor or franchisee’s strategic plan to sell his or her ownership in a franchise to investors or another company. An exit strategy gives the franchisor or franchisee a way to reduce or liquidate his stake in the business and, if the franchise is successful, make a substantial profit.

Both the above concepts are relevant to both franchisors and franchisees and here are some of the benefits:

  • Succession planning helps the franchise to plan for the long term by identifying talent within the organisation which increases employee retention and reduces hiring costs.
  • An exit strategy paves the way for a smooth transition for your management team and other stakeholders. It sets goals for creating a potential income for retirement or disability, thereby increasing the future value of your franchise.

Succession planning is almost always a part of exit planning. However, if implemented correctly, exit planning doesn’t have to end as most franchise owners think with the sale of their franchise.

As a franchisor or franchisee, do you have a succession plan and/or exit strategy in place?

 

Yours sincerely, SA FRANCHISE BRANDS Newsletter Ask The Experts

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Remember to visit www.safranchisebrands.co.za for Franchise Opportunities.

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