Published on July 29, 2010 – Updated on October 13, 2014
Successfully taking over a franchise
According to a survey carried out in 2007 by the French Franchise Federation in collaboration with the Banque Populaire, 30% of franchisees would consider transferring their business within the next 5 years. These figures are promising, but beware, the demand for recovery remains clearly higher than the supply.
Taking over a franchise: finding the right deal
unearth the franchise to be taken over and reaching an agreement with the transferor is a long procedure. On average, 12 months are necessary before reaching the signature of the contract.
In order to find a deal as quickly as possible, multiply your chances by calling on both:
- to the business transfer professionals : specialized lawyers, notaries and chartered accountants;
- to the franchisors whose brand interests you.
Acquire the business at its fair price
In order not to be mistaken about the deductible value transferred, carefully analyze the balance sheets and income statements for the last 3 years, as well as all the contracts transmitted: the franchise contract, the employment contracts, the supplier contracts and the commercial leases.
It is then that you will call on a accountant who will value the company according to one of these 3 methods of accounting valuation of a goodwill:
- the heritage method which consists of separately estimating the various assets and liabilities of the company and calculating the algebraic sum;
- the profitability method which consists of evaluating the company’s ability to generate revenue;
- the comparative method which consists of valuing the company in comparison with the value of other companies in the sector.
Become the new business leader
The success of a business depends largely on the quality of the team work.
As new entrepreneuryou will therefore have to be accepted as a new employer, in particular by creating links with the staff.
You will also need to quickly understand the day-to-day running of the business so that you can respond to any requests from your employees.
To help you, the Dutreil II law of 2005, which entered into force on March 31, 2007, encourages the transferor and the transferee to work together in the short term in order to facilitate the transition.
If the transferor and the transferee sign a mentoring agreement, the transferor receives a bonus of 1000 €.
This tutoring formula makes it easier for the buyer to find his place within the company. (Cf. Article 25 of the Dutreil II law).
Our tips:
The Chamber of Commerce and Industry of Paris organizes a course entitled “5 days to resume” and composed of 10 modules led by professionals.
Companies to take over are proposed to you and you are supervised in the realization of your business plan. Consider contacting them.