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“Exit is not a bad word”.
That simple sentence from Workout Anytime VP of franchise development Tim Hicks was the underlying message of a breakout session at the 2026 Franchise Leadership & Development Conference, “Closing the Lifecycle – Exit, Resale and Capital Events: Franchisee Exit Strategies: Creating the Practical Franchisee Exit Playbook”. Lynn Brewer, director, franchise development, for Any Lab Test Now/ARCpoint Labs moderated the session, which included a panel of Hicks, Bill McPherson, VP, franchise development for AlphaGraphics, PostNet, and World Options, and Tray Doster, VP, franchise development for Ziebart.
The three panelists agreed that an exit is a natural final stage in the franchise ownership lifecycle and emphasized the importance of planning for it well in advance. They encouraged franchisors to initiate conversations about exit strategies long before franchisees are ready to leave the business. Some begin these discussions with prospective franchisees during Discovery Days, while others offer exit-planning strategy classes at their annual conferences.
Franchisors may recognize signs that a franchisee is considering an exit, such as declining sales, disengagement, or reduced marketing spend. In other cases, the decision may be prompted by personal circumstances, including illness or divorce. Each situation is different, and factors such as the business’s recent performance and the franchisee’s desired departure timeline can complicate the exit process. Franchise teams should maintain open, honest conversations with franchisees about their future plans and potential exit timelines to better anticipate challenges and prepare for a smooth transition.
When a franchisee commits to an exit plan, the development team can begin guiding them through the process. The panelists recommended starting approximately 24 months before the anticipated departure date to allow sufficient time to execute a successful resale strategy. Key steps include reviewing the unit’s financial performance, evaluating the existing lease, and assessing the condition of equipment and any areas requiring repairs or upgrades.
Once the business’s financial records are in order, the franchisee can work with a third-party company to determine the franchise’s market value and establish realistic resale expectations. Several panelists emphasized that a successful resale starts with accurate, well-organized financial records from the outgoing franchisee, helping establish credibility with prospective buyers and making the business more attractive on the market.
“We seldom have resale issues with high-performing locations because those owners typically have clean books,” said Hicks. “In our business, it's math; it's a multiple. Where it gets ugly is when the franchisee doesn't understand the math.”
Beyond the typical two-year planning window, a successful franchise resale requires collaboration across multiple departments, including development, operations, finance, and legal. The executives noted that deals often stall because of incomplete or poorly maintained financial records, unrealistic seller expectations, or delayed and unresponsive communication from the outgoing franchisee.
“We see this all the time in what franchisees think the business is worth,” said McPherson. “They're going to look at it that they put in 5, 10, 15 years, blood, sweat, and tears, and that's all real. But unless you find a cash buyer, which is pretty rare, then it doesn't matter. It's what the bank says it's worth, and that's based on valuation, multiples, etc. So it is important to set those expectations and have clean books, financials, and tax returns that all match.”
When handled effectively, a resale should reward the outgoing franchisee for their investment and years of hard work while positioning the brand for continued success under a qualified new owner. A proper transition should also minimize disruption to employees and customers, helping maintain sales and preserve business continuity throughout the process.
Although a resale program requires significant time and coordination across multiple teams, franchisors should view it as a strategic development tool instead of an administrative process. A well-managed exit helps sustain unit performance, uphold brand standards, and create resale opportunities that attract the next generation of franchisees. Rather than marking the end of a franchise’s lifecycle, an exit can serve as a catalyst for continued growth and long-term brand success.