Friday, October 31, 2014
   
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What are the Pros and Cons of Buying Existing Franchises for Sale?

No matter where you live, you may have noticed that many of your favorite franchise establishments have closed down over the past few years.  Unfortunately, the recession just hasn’t been kind to many franchise businesses, especially in the regions that were hardest hit by the economic downturn.  That said, however, most existing franchises for sale are relatively healthy businesses.  It really depends on the type of business you want to buy. 

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

What are the “Pros” of Resale Franchises?

  • The business is already running, which gives it an existing flow of traffic, customers and cash flow. 
  • There is no need to scout out locations, review marketing trends, or wait until the building is built before starting to do business.
  • Rather than guessing how successful the business will be, existing franchises for sale have hard numbers to back up their claims.
  • Prices and payment terms can be negotiated with resale franchises, where with a new one the prices are pre-set and inflexible. 
  • Established franchises for sale have more historical financial data available for your review, so you can determine whether it is worth pursuing as an investment.

What are the “Cons” of Resale Franchises?

  • Not every franchise operator will tell you which locations are for sale, so it can be harder to find franchise opportunities for sale.
  • In most 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.
  • Before granting final approval to an outside buyer of an existing franchise, the franchisor will often require you 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.

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