Reasons to Consider Buying an Existing Franchise

You’ve decided you’re tired of corporate America or some other job that isn’t satisfying and you want to obtain the freedom that is only found in owning your own business. Many people in your shoes choose to buy a franchise. Often this is a good solution since franchises typically have a higher success rate than independent start-ups.

Franchises are businesses in a box.  It is being in business for yourself but not necessarily by yourself.  While statistics of the success rate of franchises are in dispute, there is no doubt that most franchises succeed over time. In fact, according to IFA Educational Foundation , more than 90 percent of owners renew their franchise agreements at the end of their contracts. This would indicate that franchise owners not only are successful but they are prosperous enough that they want to renew and continue in business.

When looking at businesses to purchase this makes it very compelling to purchase an existing franchise.

  • Successful Track Record: If the business is sellable it must have a successful track record. So when you combine the fact that is a franchise that has a tendency to be successful over time with the fact that you can see an established franchise’s track record you can be confident that this should continue in the future.
  • Training: All franchisors require new franchisees to be trained by them. This includes when an existing franchise is being transferred.  As a buyer you can be confident that you will clearly understand how to run the business that you are purchasing. Good franchisors provide training programs designed to bring you up to speed on the latest process techniques and marketing systems that will help you be successful in running the business. They will also have reference materials to assist you in dealing with issues or whatever comes up while you’re running your business. When the franchisor is the one training you they have a proven process that works.  Sometimes business owners do not always explain the processes that they follow clearly, so this is eliminated when you buy an existing franchise.
  • Ongoing Operational Support: Unlike an independent business a franchisor has staff dedicated to providing ongoing assistance to franchisees. You can always call on experienced individuals when you hit a rough spot.
  • Purchasing Power: A quality franchise will have the connection that allows you to leverage the buying power of the entire system to negotiate prices for everything you need at significantly lower levels than you could achieve as an independent operator.
  • Brand Recognition: This is one of the main reasons that franchises succeed. When you buy an existing franchise you not only have a regionally or nationally recognized brand but you are buying an established brand and business in a specific marketplace.
  • Easier to Secure Finances: Many start-up franchises are not able to obtain financing from banks adequate enough for many business owners to complete the start-up. When you purchase an existing franchise you are more likely to be able to get the needed financing from a bank.  The reason is because the bank has the track record of success to rely on as well as their confidence that you will be able to operate the business effectively.
  • Income From Day One: this is certainly a positive over the start-up franchise. Not only do you have a track record at this location but the day you purchase the business you will receive revenue.  As the saying goes, “revenue is king”.
  • Established Customer Base: This is important not only for established cash flow but this can be an avenue to grow the existing franchise. As in anything the previous owner may be burned out or has not promoted the business in a while.
  • Trained Employees in Place: A good franchise not only has training in place for business owners but also employees. This is helpful when purchasing an existing franchise where you are able to have employee’s that have been trained but they also have experience at this location franchise.

I think purchasing an existing franchise is genius.  Yes I said it, GENUIS!  Why?  When you purchase an existing franchise you have a proven business model with a proven track record in a specific market.  Business is not safe. When you buy and or own a business it is risky and challenging, but when you buy an existing franchise you are able to minimize the risk. You are able to have the same benefits of owning a business that you have always wanted but with lower risk. If you’re interested in buying or selling a franchise, contact Sigma for more information.

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Sigma is a the leading business broker in with Corporate offices in Dallas/Fort Worth with roots from 1984. Over 600 businesses sold in Dallas, Fort Worth, Texas, Oklahoma and across the South. Sigma provides full business brokerage services with NO upfront fees. We provide Market approach business valuations for business sales. Sigma is passionate about helping business owners achieve their goal of financial security. Contact us today for a free no obligation business valuation. We are here to help you achieve your goals.

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