Franchises Sales and Resales—To Buy or Not To Buy?
Franchises are sometimes referred to as a business in a box. The comforting aspect of buying one for some business buyers is many of the variables have already been exercised and vetted and the systems have shown a reasonable amount of success. A typical independent business that is up for resale may have more freedom to change aspects of the business, for good or for ill. People who purchase franchise or franchise resales enjoy a greater feeling of security and stability by belonging to a much larger organization with a proven track record. Whether or not the franchise is a new franchise or a resale, you will need to scrutinize each opportunity and the franchisor will also want to look at you. Buying a business in a box may not be for you. Maybe you are already confident the business you are buying will make you more money and you want to have a much greater say about the processes. Having a good conversation with a trusted Beacon Business Broker can help you explore all of your options. In either case, doing proper due diligence is still a critical part of your success. We can help you decide for yourself and help you on your path to success.
If Buying a Franchise Is The Way For You To Go…
At Beacon Business Brokers, we help potential business owners find franchises with a good fit for them. The number of available franchises is staggering, over 2000 registered in the US today. Not all are created equally. You many not qualify for some of the choices you would like and some of the choices might not be a good fit for you even though you might qualify. Each franchisor most likely will require an application process where you will be asked to provide information to them, usually in the form of a franchise disclosure document (FDD). You will typically be allowed to visit, with previous permission, other franchisees and see their operations. You need to plan on several visits.
As you search you will want to find at least one unhappy franchisee so you can ask them questions too. We will help you through the process and you will need to be diligent and active in every part of it. Each franchise has varying degrees of benefits but you will want to confirm all of them for yourself.
How Thoroughly is the Concept Tested and Proven?
Typical Benefits of owning a franchise:
♣ An operating system that is tested and proven
♣ Access to corporate business advisors and coaching
♣ Corporate Training
♣ Company-based advertising and brand packaging
♣ Business that are part of a larger system typically have a much higher success rate
♣ Better competition management
♣ Better exit strategy—more buyers for franchises than independents
♣ Generally, access to franchisor research and development
♣ Possible purchasing power through bulk buying
♣ Sometimes leasing, landlord negotiations are included and sometimes build-out costs are as well.
Is the concept a good idea? Is it a fad or will it have staying power?
You will want to confirm the type and extent of the training, what kind of ongoing support, what kind and the extent of their marketing, franchisee/franchisor relations, how much actual investment (versus just the franchise costs), how much actual earning (how much does each unit make and how long does it take to typically start making money), and what systems documentation is available?
You will want to carefully verify actual earnings.
We will ask you the following questions to help you decide:
1. Have you owned your own business before?
2. What kind of hours do you like to work?
3. What are your reasons for thinking about buying a franchise?
4. Do you have a specific area that you want to locate?
5. How much capital do you want to invest?
6. Will you have partners?
7. Have you managed people and how do you feel about that?
8. Are you going to one to only own one or are you planning to buy several?
Once Beacon Business Brokers asks these questions we can better direct you to a business that will fit your key characteristics and help you evaluate your choices. The process can take on average about a month. You are interviewing them as much as they are interviewing you. If you get through the process and it doesn’t seem to work for you, you can move on to the next one. We look forward to helping you find your next franchise. Call us today to get started! (615) 649-6999