Buying a Franchise Resale

Buying a franchise resale, which is an industry term for buying an existing franchise operation, can be a great opportunity.

Existing franchise operations go up for sale, because people retire, relocate, change their focus, or a million other reasons. Whatever the given reason is for selling it pays to have an expert franchise consultant help investigate.

There are two types of existing franchise businesses up for sale. The first type makes money. The second type is barely breaking even or losing money. Our franchise consultant team will help you determine critical information, before you buy a franchise resale.

The franchise industry has been around for over 150 years and there are thousands of franchisors with more every year. The number of existing franchise operations being put up for sale naturally grows every year as well.

Advantages to Buying an Existing Franchise

  1. There is instant cash flow.
  2. Existing customers.
  3. The local market is already familiar with the brand.
  4. The location, staff, and inventory are already established.
  5. There are hard data and history to help develop a solid business plan.
  6. Existing business data makes it easier to get a finance solution.

An existing franchise operation already has something to build on even if it has struggled a little bit. It’s never easy to take any brand to a new area, so there are advantages to having a pre-existing customer base. That doesn’t mean that it is easy to grow the business, but it tends to be easier than starting from scratch.

3 Keys To Buying A Franchise Resale

What should I look for, when buying a franchise resale? How can I make sure the business isn’t a money pit? What is wrong with this business that caused the owner to sell?

There are a million logical questions like this to ask, before you consider buying a franchise resale. Our franchise consultant team knows what questions to ask, because we have been through the process many times. We know how to approach the business owner and the franchisor to get the right information.

Our franchise consultant team will help you verify information and form a clear view of the potential in the business.

Here are the three most important things in buying a franchise resale:

  1. Information
    The business owner will be able to provide you with a very detailed overview of the business history. Franchisors also make buying a franchise resale less risky than buying an independent business, because they will verify a lot of information. Franchisors tend to be very honest, because they don’t want to start things with a new owner under false pretenses. It’s important to have an accountant look at the overview, before you go through with buying a franchise resale. It’s also important to have an expert ask questions and look for facts that may not be covered in the overview. Our franchise consultant team helps avoid common mistakes and find details people miss on their own, due to our background in accounting.
  2. Valuation
    The asking price of the business should be in line with the amount of money the business takes in. It is important to find out how the seller came up with asking price, because that will tell you a lot. It’s important to know, whether the seller had their accountant, franchisor, or an independent franchise expert determine the asking price. Sellers that have independent experts appraise their business tend to be closer in asking price to what a buyer’s accountant will come up with. This means the gap to overcome through negotiation will be smaller.
  3. Negotiation
    This is where the experience of our franchise consultant team will pay off the most. The negotiation is usually the most frustrating part of the whole process for both the buyer and the seller, because both have very different goals. The buyer needs to believe it can improve the performance of the business and make enough money to profit. Our franchise consultant team has the experience to know hardball doesn’t work, so they have perfected techniques based on finesse.

Contact us for a free consultation!

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