In this exclusive Q&A, we learn more about TITLE Boxing Club from James Lloyd (Franchise Development Manager) and Sam Heaps (franchisee).
Franchise Chatter (FC): What are the benefits of franchise resales for the franchise system?
James Lloyd (JL): There are multiple benefits of franchise resales for the franchisor. To start, a resale injects new cash into a business to increase marketing and community building efforts. It also helps the brand increase revenue streams from the business by allowing franchisees who may want to move on to a new career. Resales allow for franchise owners to transition out and give new life into the business by installing a new owner who can give new energy, passion and focus into the business.
FC: Why are franchise resales on the rise, and is this a trend to stay post-pandemic?
JL: It’s no secret fitness has been hit hard by the pandemic, but regardless there will always be a need for people to stay healthy and active. Due to the struggle businesses have had in the pandemic, the harsh reality is some may not make it. This has given rise to a lower cost to obtain a business than has been the case in the past.
This allows for a great opportunity for someone who has been looking at getting into business for themselves. The ability to purchase a business that has already been established at a lower-than-normal cost is of great interest to many people and a great opportunity to live that dream of being in business for themselves but not by themselves.
Resales are also important for franchisees who are in good standing but looking to enter the next chapter of their life. Reselling their business keeps it in the community while they are able to transition out. Overall, resales are critical for a franchise system to maintain consistent revenue streams and continue to focus on bringing passionate people into the business to retain the integrity of the system.
FC: Why should entrepreneurs invest in a resale versus a new franchise location?
JL: The already established membership base and recurring revenue stream is an appealing factor. Additionally, there’s no build-out cost, staff is already trained and ready to go, and it enables burgeoning entrepreneurs to get into a business with brand recognition in the market.
FC: What is the secret to a successful franchise resale strategy?
JL: The key here is to have great communication about the process between the franchisor and franchisees. When a franchisee has a good understanding of how to sell their business when the right time comes, you can prevent closures and also help people transition accordingly. The more information a franchisee has on how to market their business and how to value and sell their company, the better the chances become when a sale of the business is the correct strategy. Having early conversations with potential candidates about the business can also create a smooth transition of ownership.
Having good relationships with funding partners, valuation companies and business brokers can also help a franchisee and potential candidate move through the sales process in an easy manner. Sam Heaps is one of our multi-unit owners who has successfully transitioned and purchased many of our gyms through resales. It was his leadership strategies and innate ability to translate his skills as a former athlete to business owner that allowed him to receive the Most Improved Franchisee Award for taking a resale and increasing the value of the location.
FC: What are the best practices for transitioning ownership?
Sam Heaps (SH): There is value in balancing the line between having strong leadership and vision for the direction of the company you are now transitioning. It’s important to keep the people who were involved in the business previously in mind while transitioning. There will undoubtedly be changes when taking over a business, whether it’s processes, personnel or even with the product or service itself; but you want to make those changes in a way that resonates positively with the employees and customers you want to continue working with.
Strategizing how to influence positive growth within the business you are now operating will be important for a successful transition. Asking yourself questions like: Is there low hanging fruit that can easily be plucked for quick positive traction? Are there foundational changes that can pivot the trajectory of the business? Sometimes even small changes can be the puzzle piece to make things click.
In many cases, the business may already be successful but the current owners have certain life events that the business would be better off transitioning to a new owner in order to continue success in the community. The best avenue in that situation would be to sell the business as a resale to new owners who would bring a fresh perspective and motivation to successful operation.
For the sellers, the best practice in transitioning is to offer any assistance to the new owners. Whether that be through offering support in supplying a roster of employees or offering to train the owners on how the business operates, simple things like that ensure the transition will be as seamless as possible. Not only will this help promote successful ongoing operations, but also keep employees less nervous that the transition would rock the boat from what they knew as normal under previous ownership. Being open and supportive as part of the transition is a best practice for all parties involved.
FC: How are franchise resales beneficial to the local community?
SH: On a basic level, having a thriving business offering goods and services while employing people within a community is very positive. People are able to provide for themselves and their families, the community becomes a place other people want to come to visit, live or operate businesses within other successful businesses, etc. So, having franchise resales and giving someone the opportunity to run a business gives more opportunity and time for that economic and social impact on the community to continue.
FC: How can people learn more about TITLE Boxing Club and its franchising opportunities?
JL: To learn more about the TITLE Boxing Club franchise opportunity, please visit https://franchise.titleboxingclub.com/