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6 Reasons Why A Franchise Resale Is A Great Investment

Guest post by: Cory Barber

Article Overview: Shopping for a new franchise business and considering your options? One you might not have thought of is the concept of buying a “resale” franchise opportunity. There can be several distinct advantages to buying an existing franchise instead of a new outlet, one being the established track record of profitability by the seller of the current franchise. Here, I discuss 6 advantages.

6 Reasons Why A Franchise Resale Is A Great Investment

Shopping for a new franchise business and considering your options? One you might not have thought of is the concept of buying a "resale" franchise opportunity. There can be several distinct advantages to buying an existing franchise instead of a new outlet, one being the established track record of profitability by the seller of the current franchise.

Generally, it is can be somewhat difficult to find existing franchises that are for sale, depending on what business category you desire. In many cases, the franchisor holds the first right of refusal of the existing franchise, so the franchisor is notified of any intention to sell by the franchisee.

Statistics show that on average, businesses change hands within five years. This is not to be interpreted negatively, as there is a wide array of situations that can lead a franchisee to sell his or her location. Retirement, relocation, health reasons, family, and lifestyle changes are all common reasons why a franchise unit may be for sale. After all, every wise business owner has some sort of a time table for an exit strategy.

Here are just six of the benefits that come with the purchase of a franchise resale:

1. Appraising the value is easier to perform and analyze. You have concrete, historical sales and profit and loss data at your disposal, providing you the necessary information to make an accurate forecast about the future performance of the franchise.

2. The franchise resale is fully equipped and ready to go. You can literally close on the sale of the business today and unlock the doors to let customers in tomorrow morning.

3. Pre-existing loyal customer base. When you buy a new franchise, your purchase decision is based on the sales and profitability of other franchise locations, but there is no guarantee regarding the performance of the new unit. With a resale, however, you have the luxury of knowing what to expect.

4. Attractive pricing. New franchises are offered at a pre-established, set price with little or no room for negotiation. Because a resale may be on the market for various reasons, such as personal or financial, it is within the realm of possibilities to purchase the business at below-market value. The franchisee might be flexible dependant upon the circumstances.

5. Time and Money Savings. The resale will come equipped with existing employees, suppliers, equipment, and operating systems. This saves your budget for other areas, such as additional marketing and advertising. You save valuable time by having seasoned employees who are efficient at what they do, so your training time is reduced substantially. And your franchise has pre-existing business relationships with suppliers and vendors.

6. Potential for buyer financing from the franchisee. A resale might be easier on the wallet, as compared to the burden of the initial investment of a start-up franchise.

Franchisors typically don't prefer to have company-owned locations, so they like to maintain a database of potential franchise buyers. An established, successful franchise resale may be a great option to consider.

As a franchise consultant, I regularly work with franchise seekers looking for new start-ups, as well as re-sales. In addition to helping those looking for a new location, I maintain a regularly updated list of franchise re-sales in various categories and geographical locations. Your preference is dependent upon your unique circumstances.

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Article Tags: franchise business, franchise consultant, franchise opportunity, Franchise resale



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