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Preparing Your Business For Transition 1. Topics for Session  The Importance of Planning Your Exit Strategy in Advance  Set the Right Expectations when.

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Presentation on theme: "Preparing Your Business For Transition 1. Topics for Session  The Importance of Planning Your Exit Strategy in Advance  Set the Right Expectations when."— Presentation transcript:

1 Preparing Your Business For Transition 1

2 Topics for Session  The Importance of Planning Your Exit Strategy in Advance  Set the Right Expectations when Planning to Sell Your Business  Implementing Your Exit Strategy  Understanding the Sales Process  Understanding the Transfer Provisions and Transfer Documents  Transitioning your TAB Business  Resources

3 EXIT STRATEGY

4 The Importance of Planning Your Exit Strategy in Advance  Impacts your business plan  Impacts what you do next and your personal vision  Allows you to manage your business to your exit plan and make adjustments when necessary  Proactive v. reactive  Allows you to build your business in the ideal shape for your exit option  Allows you to groom successors if coming from within the business  Allows you to choose when you exit

5 Set the Right Expectations when Planning to Sell Your Business  Purchase price  Determining the value of your TAB Business from your perspective  Determining the value of your TAB Business from your buyer’s perspective  Timing  The structure of a deal can impact timing  How long does it really take to sell

6 Industry Statistics for Selling a Business

7 Key Points of Exit Strategy Planning  Plan well in advance - value is optimized when you are proactive rather than reactive  Align your day to day operations with your exit plan  To optimize purchase price, know what your ideal buyer values and build that value  Be realistic on timing- over 80% of all businesses take 9 months to 2 years to sell

8 Implementing Your Exit Strategy  Step One – Evaluate your TAB Business  Is your financial house in order?  Measure key metrics and performance indicators and know how to communicate your KPIs to a buyer  Is it all about you?  What is your Net Promoter score?  Are you effectively using all the assets available to you?

9 Implementing Your Exit Strategy  Step Two – Prepare your TAB Business for sale  Improve areas of weakness  Continue to focus on the day to day operations

10 Implementing Your Exit Strategy  Step Three – Communication  With TAB  With TAB Members (be careful here)  Timing  Transition Plan

11 Key Points to Exit Strategy  Assess your TAB Business early so you have time to shore up your strengths and address the weaknesses  Integrate the TAB tools into your business operations  Stay focused on the daily operations of your business  Utilize the Business Navigator  Communicate with TAB  If your business is underperforming, consider competitive pricing and terms 11

12 THE SALES PROCESS

13 Understanding the Sales Process  Locating a prospective buyer  The inside sale  Partners and Contract Facilitators  Fellow Facilitators  Third party buyers  Your network  Broker networks

14 Types of Sales  Traditional sale  Partner model  Contract Facilitator model

15 Understanding the Sales Process  Introducing a buyer to the TAB Business and TAB System  The current model  The TAB sales process  Qualifying the buyer  Franchise Disclosure Document  Questions on the franchise agreement  Waiting periods under the FTC Rule 15

16 Understanding the Sales Process  The TAB sales process (continued)  Attending a TAB Board meeting  Discovery Day  Validation  Territory considerations

17 Understanding the Sales Process  Available Support  TAB’s enhanced re-sale support  Area Developer support

18 Understanding the Sales Process  Preparing your business for due diligence  Be organized  Have a confidentiality agreement in place first

19 Key Points of The Sales Process  Know the system that the buyer is joining  Review the Value from TAB spreadsheet  The buyer must meet TAB’s current qualifications  Communicate with TAB to facilitate a smooth transition through the TAB sales process  Respect your fellow franchisees when commencing the validation process  TAB’s enhanced support is available to assist you through the process

20 TRANSFER PROVISIONS AND DOCUMENTATION

21 Transitioning your TAB Business  Transition plan  Learning and introductory phase  The mentoring phase  Passing the torch phase  Survival provisions in your franchise agreement

22 Understanding the Transfer Provisions in Your Agreement  Compliance  TAB’s consent  Buyer qualifications  TAB’s right of first refusal

23 The Transfer Documentation  Three agreements  Buy sell agreement  New franchise agreement  Transfer and termination agreement  The closing

24 Payments  Payments to you  Purchase price  Receivables  Payments from you to TAB  Required fees (i.e. transfer fee)  Optional fees (i.e. re-sale assistance fee, broker fees)  Payments from your buyer to TAB  Training fee  Marketing fee

25 Key Points for Transfer Provisions and Documentation  Well organized due diligence process can help you counter any buyer skepticism  Have a confidentiality agreement in place before disclosing your business information  Your buyer will not be assuming your franchise agreement and only TAB can negotiate the terms of the new franchise agreement  Your closing will be subject to the 14 day and 7 day rule under the FTC rule  The purchase price is paid to you

26 Resources  Take advantage of the re-sale support  Resale Manual  This document is located on the intranet in the Library under Running Your TAB Business and the folder titled Exit Support  Re-sale Team can be reached at  Area Developers

27 Questions?


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