
Legal Q&A
Q
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I am considering a franchise sale, and I am curious how I might increase the sale proceeds even a little. I currently operate a small-to-medium franchise brand, and I am considering selling it. From what I have looked into, even within the same industry, sale prices differ greatly from one franchise to another. Is there a separate method or something for increasing the value of a franchise?
franchise sale
franchise
Answer
Published:
Author : Kuk Il KIM
We understand that you are considering a franchise sale.
Your question appears to concern how to increase proceeds when selling a franchise.
There are three representative methods.
First, maintaining high operating profit and a high operating profit margin.
One of the important factors for increasing sale value is operating profit and the operating profit margin.
Because a higher operating profit allows a higher multiple at the time of sale, it is important to generate stable and continuous profit.
In addition, overseas expansion can be a way to increase sale proceeds.
This is because there are many cases in which franchises that have successfully entered overseas markets received higher valuations at the time of sale.
Expanding the business through overseas entry can raise corporate value, and overseas equity investment and dividend income can also act as favorable factors at the time of sale.
Finally, holding the trademark right in an individual's name can reduce the tax burden at the time of sale.
This is because, if the franchise headquarters holds the trademark right in an individual's name and transfers part of the sale price as the trademark right, the capital gains tax rate can be lowered.
Through this, it appears that the sale proceeds can be maximized.
However, the strategy may vary depending on the situation of the franchise brand you currently operate.
Therefore, we recommend that you establish a method for maximizing your franchise sale proceeds suited to your situation through a consultation with an M&A attorney.
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Kuk Il KIM
T. 070-5117-2950
Experience as Chief Prosecutor at the Seoul High Prosecutors' Office · Attorney Specializing in Criminal Law/Drugs/Intellectual Property
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