Buying an established franchise business can be a rock-solid investment. That’s especially true if you can find a well-run business under a great franchise brand.
However, buying a resale franchise isn’t for everyone. Some entrepreneurs prefer independent businesses. Some would rather start their own franchise instead of purchasing a resale. And if you purchase a poorly run franchise or choose a mismanaged brand, you’re in for serious disappointment.
So before you buy a resale franchise, ask yourself three questions:
- #1: What makes owning a franchise a better option than independent business ownership?
- #2: If I want to own a franchise, why buy a resale franchise instead of a new one?
- #3: How can I find the right resale franchise for my goals and resources?
Franchise Business vs. Independent Business
There’s a long-running debate about whether it’s better to own a franchise business or an independent company. At the end of the day, it’s a matter of personal preference. Some people prefer a proven blueprint and recognized brand. Others want the freedom to run their business their way.
But when it comes to purchasing an established business, there’s a lot to be said for franchise resales. The main advantage here is that franchises are designed for a range of different owners. That makes it much easier for a franchise location to work under new ownership. Whereas, independent entrepreneurs tend to build businesses according to their own preferences and talent. Under new ownership, many of these businesses struggle.
Then you have the usual reasons for choosing a franchise over an independent business. A proven blueprint, plus training opportunities and corporate support, give franchisees a head start. Marketing tends to be easier with a recognized brand and corporate marketing materials. And by choosing a forward-thinking brand, you’ll be well-positioned for future developments in the industry.
Resale Franchise vs. New Franchise
If you want to own and operate a franchise business, you have two basic paths to ownership. The first is to purchase the rights to a new franchise opportunity and develop your business from the ground up. The second is to purchase a resale franchise that’s already operational.
While many entrepreneurs would rather start a new franchise, others prefer resale opportunities. Resale franchises typically cost more than the startup costs for a new franchise. But they also typically come with less risk and a faster route to profitability.
Here are four other reasons that you might want to purchase a resale franchise instead of starting a new one:
- Different Business Challenges. Some entrepreneurs love the challenge of building and developing a business. Others excel at managing an already up-and-running company. If you fall into this second category, it makes more sense to purchase an existing company. And if you prefer franchising, that means finding a resale franchise business.
- Established Cash Flow. Any time you purchase a resale business — whether a franchise or an independent business — you benefit from existing cash flow. A resale franchise provides you with an established customer base, allowing you to become profitable much more quickly. Instead of starting in the batter’s box, you’ll be on second or third base.
- Existing Infrastructure. In the same way that a resale franchise provides you with existing customers, it also provides you with existing infrastructure. You’ll have key assets in place, such as a physical location, marketing resources, back office systems, and equipment. And you’ll have a staff that’s already familiar with day-to-day operations.
- Access to Protected Territories. If you get in on the ground floor with a franchise brand, you get your choice of territory. But if you’re late to the game, you might find yourself looking at markets with limited potential. Purchasing a resale franchise business will allow you to acquire the kind of territory you’re looking for.
Finding the Right Resale Franchise Business
Buying a resale franchise can leave you with a steady and reliable income stream for years to come. But if you purchase a mismanaged franchise or join a brand in decline, you’re likely in serious trouble.
One of the best ways to avoid this scenario is to hire a business broker. At Murphy Business, our brokers make it easy to navigate the franchise resale market, matching you with the right franchise business and the right franchise brand.
A great business broker also makes it easier to negotiate and close the purchase of a franchise business. Your broker can counsel you throughout negotiations and help you avoid common mistakes made when purchasing a business. Brokers can also refer you to legal and financial experts or help you acquire financing through local lenders.
Ready to buy a resale franchise business? Call Murphy Business at (888) 561-3243 today to request a free consultation!