Monday, April 21, 2014
   
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Buying Franchises for Sale by Owner – Is it a Good Idea?

Hand_With_CoinsNo matter where you are looking to buy a business, there are always plenty of franchise opportunities available.  In fact, once the word gets out that you’re searching; many franchise business brokers will be out looking for you.  The problem with buying a new franchise is how long it takes to become profitable.  With all the start-up costs involved in buying a new franchise, it’s amazing they can convince anyone to take the risk, particularly in this slower economy.  That’s why I always recommend franchises for sale by owner over buying a new franchise.

What are the “Cons” of franchises for sale by owner?

•             If you are specifically seeking out franchises that are already established and for sale by owner, then you can expect to save a lot of time, frustration and money compared to starting a brand new business.

•             For one, the business is already running, which gives it an instant flow of customer traffic from day one.  This translates into better cash flow for the business owner.

•             When buying franchises for sale by owner, there is no need to scout out locations.  Nor will you need to study the competition, review marketing trends, or wait until the building is built before getting started.

•             With resale franchise businesses, prices and payment terms can be negotiated, but with a new one the prices are predetermined.

•             Rather than being forced to guess about whether the business will be a success, you will have hard numbers to look at.  Established franchises in a “for sale by owner” listing usually have more historical financial data available for you to review, so you can determine whether it is worth pursuing as an investment.

What are the “Cons” of franchises for sale by owner?

•             In many cases, the franchisor maintains the right of first refusal to purchase any existing franchises for sale in their system. It is important to find this out upfront, before you waste time negotiating with a franchisee.

•             First of all, not every franchise operator will tell you which locations are for sale, so it can be harder to find franchise opportunities for sale.

•             Before granting final approval to sell a franchise to a new owner, the franchisor will often require prospective buyers to complete an expensive orientation program.

All in all, if you are looking for existing franchises for sale, the best way to find one is by searching on a Franchises FSBO Directory.  These sites allow potential buyers to communicate directly with the franchisee without involving a middleman.

Image Courtesy of moomsabuy/ http://www.freedigitalphotos.net/

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