Entrepreneurs who are looking to getting into a franchise often look at building a new store in a new location. The shiny new store feel and the optimism of being the first owner in a particular area are some of the reasons most people prefer getting into a new franchise.
If you’re considering investing in a franchise opportunity, you should think about purchasing an existing franchise. Statistics indicate that businesses change ownership every four to five years and this includes franchises.
Like any other businesses, franchises come up for sale from time to time.
Buying an existing franchise can offer advantages over investing in a new franchise:
Here are the top 7 reasons:
- The current revenue stream of an existing franchise has a lot of value and provides benefits versus a brand-new franchise. In an existing franchise, you are not taking over with zero sales. There is a proven track record in place, which will indicate how the business is performing. As a result, you are more likely to become profitable faster.
- A new franchisee can bring enthusiasm and creativity that will translate into added sales. With a new owner, there also come new ideas, which the previous owner may not have thought about.
- The existing franchise is already furnished, often filled with stock and is already in operation. The ability to truly purchase a turnkey opportunity exists when you purchase an established franchise.
- Buying an existing franchise can often save time and money compared to starting a new franchise. In an existing franchise, you already have employees who know how the business operates. Therefore, you can save time required to interview and find new staff members. Money is saved on investing in new furnishings and equipment.
- The investment to acquire an existing franchise could be the same or less than the investment in a new franchise. Also, since people sell for various reasons, including personal or financial, there could be an opportunity to purchase an existing franchise at below-market price.
- If you are looking to buy a franchise in a particular geographical area, buying an existing franchise may be your best course of action. In established areas, new franchises are often limited or impossible.
- An existing franchise may have a digital presence. These may include a Facebook business page, Instagram, Twitter or a LinkedIn page. Having an established social media presence is a great added value in purchasing an existing franchise.
Finding Existing Franchises for Sale:
If you have an interest in a specific city or territory, you could speak with the current franchisee and indicate that you are interested in buying a franchise. They will be able to tell you how to get into the franchise.
You can look for business listings in local newspapers, or online market places such as Kijiji. Individual owners and business brokers will often list a business in the business opportunity section of their local newspaper or online.
Contact local business brokers and visit their websites. Franchise brokers who represent franchisors may also have franchise resale listings.
Although you may have spoken to an existing franchisee, the franchisor will need to meet with the prospective buyer to do an interview. In the end, the franchisor will have the final say as to who purchases the franchise. The main reason is that they have to see if you are a good fit.
If you are looking to buy or sell your franchise, leave a comment below.