Some franchisors will bet on the horse they know—an existing franchisee—rather than take the risk of bringing in a new operator. “Sometimes that’s a great thing, but as an across-the-board practice, we don’t see that as particularly healthy,” says Alan Gallup, a principal at National Franchise Sales. In any industry, it is important to have a certain portion of new development or resales coming from fresh blood coming into any organization.
“That helps to stimulate new thought, new ideas and it creates a little competitive environment, which if properly managed, is a very healthy thing,” says Gallup. In addition, for a franchisee who is looking to maximize the value of their property, restricting the resale to a handful of chosen favorites is going to limit the value.