British Franchise Association (bfa) head of marketing Dan Archer said: “Franchise agreements tend to be for a fixed term, usually five years, with an option to renew for a further five. It is important, therefore, that franchisees start their franchised business remembering that they will be running them for a finite period.”

Keeping the end in mind also enables franchisees to build a long-term exit strategy that is sustainable and in line with their performance targets and aspirations, and it demonstrates to the franchisor a commitment to making the business work for the entire term of the agreement.

An increasing number of franchisors discuss the exit strategy as a part of the initial franchisee selection process. When franchise owners do decide to sell, their first port of call should be their franchisor.

bfa Chairman and managing director of corporate promotion and recognition franchise Recognition Express Nigel Toplis said: “The franchisor is constantly advertising, marketing and promoting the brand and is often visible in franchise magazines, national press, at exhibitions and on websites and it is therefore the brand that attracts a prospective buyer.

“In addition, most franchisors keep a database of people who have enquired about a franchise opportunity over the years and when this can be a useful starting point.”

In preparing a franchise for sale, there are certain things that a franchisee needs to do.

James Harmey, a director at bfa affiliated chartered accountants Franaccounts, said: “You will need to have up-to-date information available for inspection by potential buyers, including business plans and budgets, as well as financial documents such as profit and loss statements, tax returns, loans against the business and the lease.”

When it comes to valuing the franchise, it is difficult for the franchisor to get involved as this could create a conflict of interest between the existing franchise owner and a prospective one.

Franchisees are therefore advised to seek professional advice, preferably from a bfa affiliated professional with experience of franchising.

According to Nigel Toplis, at Recognition Express it is not unusual for a franchise to be worth three times the original cost of the investment within the first two to three years, and up to 20 times over a more substantial period of time.

Dan Archer added: “The valuation of a franchise can depend on a number of different factors relevant to the nature of the business, but broadly speaking, the more successful the business the better the resale value it will achieve.”

For more information on franchising visit www.thebfa.org