Of course, there must also be emotional attachment to the business at hand in order to optimize value. If the plan is to grow the business to maximize value, and there is emotional commitment to that plan, the results can be dramatic. How important is emotional attachment? I’ve stayed in hundreds and hundreds of hotels, and yet I’ve never seen anyone clean the toilet in their room. There’s simply no emotional attachment to the asset. I’ve never seen anyone wash their rental car either. Nurturing, prodding, improving, adjusting, and building, all take commitment in order to be the creator of the ultimate value.

Like a baboon picking fleas, each business opportunity has to be examined carefully. The asset value of some service-based businesses will often hold value, and in fact increase in redeemable value as each new client is added to the business. The exit strategy of a retail location should include an assessment of the initial investment required, real estate values, competition, and demographic factors. The history of increases in Franchise Fees should also be considered to predict future minimum transfer value.

I experienced a good case in point about Franchise Fees. In 1972, a good friend and I decided that March break was best spent at Daytona Beach, as all good first-year college students conclude. We found this new restaurant there that had line-ups around the block - literally. It was called McDonalds. When we returned to campus, we went to the library to do some research because we were told that McDonalds might entertain building one more restaurant for the right person. The cost at the time was $25,000. If we could have figured out how to raise the money, we would have become partners in a McDonalds Franchise, and my bet is we would have at least doubled our money.

Portability of transfer, able & willing marketplace, skills & training required for entry into the business, and predicted brand value at the time of anticipated transfer are all part of the equation. Flexibility of the Franchisor to address new market opportunities will create new markets for the Franchise. In addition, expansion plans of the Franchisor need consideration. Static doesn’t cut it. A plan to continue to bring in new and vibrant Franchisees well into the future will increase brand value, and nurture the market for the product or service of the Franchise system.