Maybe You’d Rather Buy An Existing Franchise?
Franchising represents a huge percentage of America’s business community – one of every 12 businesses in the USA is a franchise! Could that mean that one of every 12 businesses for sale in the USA is a franchise? Possibly, but by any count franchise resales are booming.
For several good reasons:
· Like other business owners, franchisees eventually decide to retire.
· Some franchisees want to relocate.
· Multi-unit and multi-concept franchisees often want to downsize.
· Some franchisees decide to switch concepts after a period of time.
· Many savvy franchisees started their businesses with the intent of selling as part of their exit plan.
· Age and serious illnesses force some franchisees to sell.
· And a percentage of franchisees discover that they’re not cut out for franchising, or they no longer want to operate their franchise.
Are you cut out for a start-up?
All of these reasons add up to opportunities for people who want to buy a franchise. Most prospective franchisees look at buying a start-up business. However, that may not be the best path for you. Some people are either not cut out for start-ups, or they simply want to avoid the challenges of a start-up. In these cases, buying an existing franchise may be the best decision.
The benefits of a franchise resale are many:
· The business already exists, and you can verify the numbers.
· Customers are already patronizing the business.
· The staff is functioning.
· Advertising is in place and working.
· Equipment and inventory has already been purchased.
· There are no start-up challenges to worry about.
· And perhaps best of all: The business is generating a profit!
Many new franchisees prefer to step into an existing, profit-generating business where important decisions have already been made and the emphasis is on taking care of existing customers as well as bringing in new customers.
Existing franchises are more expensive
Of course, for all this upside, there’s some downside to buying an existing business. If it’s a profit-generating business, it’s going to cost more than a start-up. According to Johnny Sellyn at FranchiseResales.com, “You can expect to pay as much as 30% more to buy an existing, successful franchise than to begin one from scratch.” But the extra cost may be worth it, especially if you want to step into a business that pays you a salary from day one. That’s not the case with most start-ups.
Under-performance is an opportunity
Another downside could be the status or reputation of the business. Even though the franchise generates a profit, it may be under-performing due to a lack of performance by the existing franchisee. Still, under-performing businesses represent huge opportunities to people who are willing to follow the franchisor’s guidelines for re-generating a business.
How do you find franchise resales? It’s easier than you think. You can begin by asking franchise companies for their list of resales. Almost every franchise brand offers resales. Business brokers often list existing franchises for sale. And FranchiseResales.com is a website that’s devoted to assisting people who want to buy existing franchises.
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Purchasing an Existing Franchise Instead of a Startup
Starting a business from scratch may be more of a challenge than you’re willing to accept. Many people are not cut out for a startup business and would be more comfortable buying an existing franchise. Have you considered the advantages? Here are four to think about.