Exit Strategies for Franchisees: Building a Path to Smooth Transitions

At the recent Franchise Leadership & Development Conference, a distinguished panel of franchise executives came together to discuss one of the most complex - and often overlooked - aspects of franchise ownership: exit strategies. Moderated by Doug Flaig, CEO of Stratus Building Solutions, the discussion featured insights from Mike Cline (Alliance Franchise Brands), Michael Lassen (Steak ’n Shake), Paige Robinson Dosch (Unleashed Brands), and Abhi Patro (Firehouse Subs). Together, they explored how franchisors and franchisees can better prepare for resales, transfers, and smooth ownership transitions.

Transparency and planning from day one

The conversation began with a simple but crucial principle: transparency. Cline noted that the best resale outcomes begin when franchisors and franchisees are open with each other early in the process. “We want our franchisees to let us know ahead of time that they’re considering an exit,” he said. “That allows us to plan and support them properly.”

Robinson Dosch agreed, adding that franchisors should provide clear, digestible documentation, and not just lengthy resale manuals that few read. “It’s about making the process accessible,” she said. “Use technology and collaboration tools to make it easy to share and submit information.”

She emphasized the importance of “starting with the end in mind,” especially for newer generations of franchisees who may see ownership as a 5–10-year investment rather than a lifelong pursuit. By setting expectations early, brands can normalize exit planning as part of the franchise lifecycle.

Communication, timelines, and partnerships

Patro reminded attendees that resales involve multiple stakeholders—sellers, buyers, banks, landlords, and the franchisor—and that managing expectations around timelines is essential. “Every deal is different,” he said. “You’re not selling groceries, you’re selling a business. It takes time to do it right.”

He also encouraged brands to cultivate strong partnership networks, such as brokers, lenders, and legal counsel, to help expedite deals, especially in time-sensitive situations like bankruptcies. Lassen echoed these points, underscoring the value of education. His brand holds an “Exit Strategy” class at its annual convention and uses video tutorials to help franchisees understand the resale process. “Clean financials are critical,” he emphasized. “We promote that constantly, especially if you plan to exit in two or three years.”

Avoiding common mistakes

The panel agreed that one of the most frequent mistakes sellers make is taking their “foot off the gas” once they decide to sell. Lassen recalled instances where franchisees saw revenue decline after signing a letter of intent, only for the deal to collapse when lenders reviewed updated financials. “You have to sprint to the finish,” he said. “Keep running the business as if you’re not selling.”

Patro shared cautionary tales of sellers presenting inaccurate financials or failing to disclose relevant background information about buyers. In one case, a buyer with a serious criminal history was discovered only late in the process, which delayed the transaction and damaged relationships. “Transparency protects everyone,” he reiterated.

Robinson Dosch warned against rushing struggling franchisees out of the system without thorough due diligence. “Sometimes closure is the right option,” she said. “It’s better to protect the brand’s long-term health than to force through a sale that sets the new owner up to fail.”

Valuation and setting realistic expectations

When it comes to valuation, Robinson Dosch recommended partnering with professional business appraisers to set realistic expectations and provide market comparisons. “Franchisees don’t always want to hear valuation advice from us,” she said. “It resonates more when it comes from an external expert.”

The panel also cautioned against franchisors offering specific pricing guidance, which can lead to legal risks. Instead, they advise guiding buyers and sellers toward independent financial and legal counsel.

Structuring support for resales

As the session drew to a close, panelists discussed how their brands structure internal support for resales. Cline’s company employs a dedicated resale specialist who reviews purchase agreements and ensures compliance with franchise agreements. Others use internal websites or listing platforms, such as BizBuySell, to connect sellers and buyers.

Robinson Dosch highlighted the potential of internal resale portals and cross-brand buyer opportunities. “Sometimes your best buyer is already within your network,” she said. “But it’s also healthy to bring in new operators who bring fresh energy and perspective.”

Across all perspectives, a few key themes emerged: plan early, communicate clearly, educate continuously, and stay transparent. Franchise exits are complex, but with proactive planning and mutual trust, they can be opportunities for growth, not obstacles. As Flaig concluded, “Helping franchisees exit successfully isn’t just about closing deals. It’s about protecting the brand and preserving the culture that made it thrive in the first place.”