There are several advantages to buying an existing franchise versus starting a franchise from scratch or buying a non-franchise company. Inside the franchise industry, the sale of an existing franchise is known as a “franchise resale.” This is because a franchisor previously sold the license to operate in that territory and now the license, along with the business, is being sold to a new franchisee.
The franchise model provides entrepreneurially-minded individuals the resources needed to build on an existing business model. Franchisors strive to provide a developed and proven way of doing business, ongoing guidance, systems, and support. This is great for interested franchisees because it provides the independence of small business ownership alongside the support of a larger network and institutionalized knowledge. For this and other reasons, franchises have a higher rate of success than other start-up businesses.
Starting a new franchise, even with support from the home office of the franchisor, can prove challenging. A new franchisee is still starting from scratch – once the territory is secured, facility is outfitted, and staff are hired, the business must begin to find customers and build its presence.
This is why franchise resales have proven highly desirable. Buying an existing franchise allows individuals who are interested in the franchise model to purchase an existing business that has cash flow, customers in place, staff, and a brand presence. Additionally, they may also be given exclusive territory, marketing breadth, and other support provided by the franchisor.
Small Business Deal Advisors has advised on numerous franchise resale transactions and works closely with franchisors to ensure a smooth transfer and sale.