last updated 15/09/2019
FINDING THE LINK
last updated 15/09/2019
Link finds buyers for existing and new franchise businesses
If you’re looking to buy a business, one name will soon come up – Link Business. Link is now one of the world’s leading business brokerages. It began in Auckland in 1996 and is still New Zealand-owned and operated, with eight offices from Whangarei to Christchurch, as well as brokers in Nelson and Otago.
Nick Stevens started with Link as a broker back in 2001. He has personally helped over 250 owners market and sell their businesses and today is general manager of Link Ellerslie and a director of Link International Group.
‘I think one of the biggest advantages of using Link is that we have a deep understanding of franchising, and of franchise brands, built over many years,’ Nick says. ‘Many of our offices have franchise specialists; they develop an understanding of what the franchisor is looking for in a new buyer.’
selling existing businesses
‘It’s important to remember that, in most franchises, buyers of existing outlets have to be approved by the franchisor,’ says Nick. ‘If a franchisee appoints us to market their business, we’ll talk to the franchisor too, check what their approval process is, what the criteria are (such as testing, finance and visa status) and get an understanding of what the franchisor is looking for. That way, we can save a lot of time and effort for buyers and sellers alike.
‘For existing business owners looking to move on, another important benefit we can offer is independence. It’s understandable that you might have an attachment to a certain price, but is that realistic? We’ll conduct a market appraisal and prepare a sales memorandum with all the appropriate information. The information from that is then put into our Link Evaluation Tool to see what might be realistic before actually testing the market. If a business is performing at a certain level, it will justify the price.
‘Generally, the market for re-sales is very good at the moment. If franchisees who are looking to move on listen to us and price and market the business properly, the buyers are out there.’
Nick says that the recruitment of franchisees for new locations can be trickier, so franchisors need to look for ways to appeal. ‘There are plenty of buyers looking for immediate cashflow, but buyers are a bit shyer when it comes to the increased risk of opening a new outlet, even if the potential gains are much higher.
‘There are various ways that a franchisor can make their opportunity more appealing. First is having a great brand with a very good track record of profitability. That’s reassuring, as is a base of happy, long-standing franchisees. In some cases, franchisors may benefit from pricing their opportunity more competitively to help good new franchisees get in for a lower investment – after all, the value of having a successful franchisee and a larger network is long-term. Another thing to look at, especially in hospitality and retail, is fit-out costs. How can these be reduced? It all helps.
‘Again, using a broker offers franchisors certain advantages. Most franchisors are flat-out running their systems, supporting franchisees and helping them maximise their own returns. They have to deal with suppliers, new products or services, changing systems, site negotiations and, in many cases, run company stores or distribution networks as well. Link can take the hassle out of the recruitment process, establishing criteria with the franchisor and pre-qualifying applicants.
‘While the vast majority of brands we deal with are hospitality and retail, we’ve dealt with a wide range from home services to industrial applications and finance franchises.’
master franchise and franchise system sales Link has also acted in the sale of both regional and national master franchises, bringing considerable experience and expertise to the process. ‘Master franchises from overseas don’t necessarily understand our demographics or our transport networks, and why it might be a better idea to have one master franchise for the whole country rather, for example, two in the South Island. But once you are on the same wavelength, there are a lot of possibilities.
‘Equally, selling regional master franchises, or finding new owners for an existing national franchisor or master franchise, is very exciting. Many established franchisors are now at the stage of seeking an exit strategy as the founders prepare to take a well-earned retirement or move on to other projects. We can help – it’s more complex, but we’ve found buyers for national and master franchises valued from under $200,000 up to tens of millions.’
‘Whatever you are selling, we can bring our whole marketing system to bear on finding a suitable buyer,’ Nick concludes. ‘We have a potential buyer database of 22,000-plus, all people interested in new opportunities and looking for the right business. For some, that will be an existing café, while others are looking for something fresh and new.
‘For anyone looking to sell a business, master franchise or system, please contact us. Fees will vary according to the type of business, but there’s one thing that’s certain – we don’t get paid until we’ve done the deal.’
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