A franchise is an excellent opportunity to develop a new business from an existing, proven business model. When you invest in a franchise, you take on the fantastic product line of a successful company, their well-oiled business processes, and the marketing of an existing business.
Take on an existing franchise, and thrive as your own boss in an exciting new business opportunity.
With most franchise opportunities, you have to set up your HQ, training, and operational functions. But we’re offering something a little different here on Franchise Direct: franchise resales, helping you get ahead more quickly.
Franchise resales are franchise outlets that are set up and already running. They have a healthy customer base, and all of the operational systems, processes, and staffing are already in place.
Franchise resales provide the opportunity to walk into an existing business and start turning over a profit from day one!
Interested? Read on for top tips that help prepare you for your franchise resale purchase.
Why would I buy a franchise resale?
You're probably already interested in becoming a franchisee - that's why you're reading this article, after all. But what might be even more appealing is the idea that you're taking on an operational business -
Walk in, take the keys, open the doors, and serve customers.
Win-win.
And with minimal setup, you have an operational business from the moment you invest.
But there are things to consider before you take the plunge. And that's what this article is about.
The first question to ask is:
Why is the franchisee selling their business?As the US franchise market matures, we’re finding that more and more franchise resales are becoming available because the former franchisee:
- Is retiring, ill, or relocating
- Has another business they want to turn their focus to
- Is unable to commit 100% of their time
Alternatively, their strategy might always have been to sell the business once they’ve hit a particular business milestone or profit margin. Or perhaps, they realized that the company they chose wasn’t the right fit for them after all.
These are all entirely legitimate reasons to prompt a franchise resale, but it's essential to find out WHY your reseller has chosen to leave.
What to look for when investing in a franchise resale
Once you’ve established why the franchise is up for sale, there are several things you should find out before you commit to progressing with your investment.
Find out:
- Actual performance figures - how is the business performing in the marketplace compared to physical or online competitors?
- Whether the sale represents value for money - seek advice from an accountant, and go over the books to ensure this is a viable business.
- If existing staff are staying - a franchise resale is an operational business with employees. So, find out if you inherit those staff members or you’ll need to recruit new workers.
- What the existing staff think about the business - has it been well-managed? Are they happy? Is the business thriving? Are they willing to stay on after the sale?
- Are the existing customers happy? - do some market research, and find out if the existing customer base is willing to return under new management. Find out what they like about the business and what they would change. This is your opportunity to connect with real customers who will sustain your company in the future.
- How you might grow the existing customer base - are there demographics that the current franchise owner is yet to connect with? Or have they found the largest possible customer base?
- Is there customer loyalty? - you will have to rebuild confidence in existing customers. Consider a hand-over period if the existing franchisee has an excellent relationship with their customer base - that way, you create a more seamless transferral of ownership that won’t affect customer (or staff) morale.
What are the advantages of buying a franchise resale?
Franchise resales are becoming more and more popular throughout the US. And it’s clear to see why. Those who invest their money with a franchise resale enjoy a range of advantages, including:
- Knowing what to expect by reviewing existing performance
- Getting started immediately - your franchise is already up and running, so you can generate cash from day one.
- Business premises are "go" - there's no need to find a location; everything's already set up and ready to go.
- You inherit experienced staff and existing customers - no lengthy recruitment processes, and your franchise resale business is already serving existing customers.
- An existing reputation - not only do your customers already know, trust and love your products and services, but they recommend the business to their friends and family.
What should I be cautious of with a franchise resale?Although investing in a franchise resale opportunity has a broad range of benefits, there are some things to be cautious of.
Inspect the premises with a fine-toothed comb, and find out if you're going to need to invest more capital into renovations or refits. If the existing business isn't performing well, consider how you can transform the customer experience and develop better relationships with employees.
Find out if snagging points are resolvable:
- If the staff are unhappy, find out why. Can you resolve this?
- If the customer base has dwindled, can you identify the cause?
- And do you have the investment power and energy to turn it around?
Ensure that you review your franchise agreement carefully - never assume you'll get the same deal with the franchise parent company as the previous owner. Find out if there are amendments to the prior agreement - talk to a solicitor who can review the deal.
Finally, fully explore the initial investment. Is there a transfer fee? And would it be you who needs to pay that or the existing franchise owner?
And find out if there are training fees. These are usually included in the original franchise agreement, but is the franchise parent company prepared to train you and any new staff you bring with you?
How to buy an existing franchise
First things first: check out our excellent franchise resale opportunities. We have several exciting prospects in various business sectors, from catering and hospitality to education and fitness.
Begin your new start today with Franchise Direct.