If you’re thinking of buying a franchise as a way to secure your future, you’re not alone. The US job market is still pretty tough. Competition for high-paying jobs is quite intense.
It’s it any wonder that downsized executives and middle management personnel are looking at some career alternatives? Could becoming a franchise owner be a good one?
About a 1/3 of the folks that contact me for a franchise search help ask me if I know of any existing franchise opportunities that may be available. Buying someone else’s franchise can be a great way to get into franchising, for sure…
There’s certainly some positive aspects to buying a used franchise. Like;
- Immediate cash flow
- An existing base of customers/clients
- A built-in mentor
Of course buying a franchise, whether a start-up, or in this case, an existing franchise business, has many other advantages.
Lowering your risk
Almost everybody looking to buy an existing franchise thinks that it will really lower their risk if they buy a business that already has money coming in. Sometimes, it can.
Anne Barr, A fellow franchise professional , (who also left the same national franchise brokerage franchise that I was a member of) does quite a bit of work in franchise resales, and wrote this short post about purchasing an existing franchise business. Contact her if you’re in the Dallas-Fort Worth area. She really knows her stuff.
There’s certain steps that you’ll have to take in order to purchase any existing business of any type, and some of them even involve a favorite and fun topic of all of ours;
The Law.
Business.Gov
The folks over at Business.Gov lay these steps out nicely;
- Thoroughly research the business and look for legal red flags. Learn as much as you can about how the business’s operations from the current owner, including details about existing contracts, insurance policies, licenses, employee agreements, and commercial leases. Leases in particular can be a tricky issue for new buyers – you may need to have the landlord’s permission to legally transfer a lease – and you could be held to contractual commitments over employee compensation and benefits.
Here’s the rest of “The Legal Steps to Buying a Business,” from my friends over at Business.Gov.
**********************************************************************************************************
** (The legal steps that you need to take to buy a franchise or non-franchise business are really important. Don’t be cheap. Get a competent attorney.)
Here’s a fun recent post that concerns an attorney.(Check out the rather colorful comments)
Debbie Kelly says
July 29, 2010 at 1:15 pmJust finished reading a book about how to start a franchise and this information was great about exsisting francises. Thank you.
The Franchise King says
July 29, 2010 at 2:18 pmDebbie,
Thanks for reading the post, and commenting on it!
I would be remiss if I didn’t mention my FREE eBook style guide available over at http://www.franchiseonlineuniversity.com that may help you even more..
The Franchise King®
Melody Lamb says
July 29, 2010 at 7:38 pmThank you for this very enlightening post regarding existing franchise. Very helpful!
Michael Pearson says
July 29, 2010 at 9:04 pmReally informative article, looks like a very valueable resource. thanks so much.
The Franchise King says
July 30, 2010 at 7:36 amMichael, Melody, and Fatin,
Thanks for stopping by and reading my post on
Used Franchises!”
I appreciate it.
The Franchise King®
ToddWeissCFA says
July 30, 2010 at 9:10 amGood post Joel. I think it all depends on what folks are looking for. The nice thing about buying an existing business is the immediate cash flow. The challenge is it usually costs more as the business is established. Like anything else, if it’s a suitable investment and you perform your due diligence on both the financial performance and the viability of the franchise system it can be an attractive option. Thanks for sharing.
Slaney says
July 30, 2010 at 3:02 pmJoel,
No problem! Thank you for the great post. Keep them coming.
Sheree
Five Star Painting Franchise
The Franchise King says
July 30, 2010 at 3:16 pmTodd,
Thanks for commenting on this post, and for becoming such a loyal reader. I appreciate it.
You’re doing a fine job over at your blog, too;
http://sunshineconsultingltd.com/blog/?p=735
Sheree,
Thanks again for the shout-out, and I hope that you like things over here (Because I’m such a gentle and laid back blogger, that you subscribe. (Top Right)
🙂
The Franchise King®
Francis A says
July 31, 2010 at 12:15 amGreat Post!! Very useful information and I love that you were candid on the pros and cons! Look forward to more posts!!
David Sedbrook says
July 31, 2010 at 9:01 amI think this was a post that had some great information that is very rarely spoken about in the franchise world. Buying a ‘used’ franchise can cut the cost down dramatically however, you must make sure you understand why the franchisee before you is leaving the business. This is a great post.
The Franchise King says
July 31, 2010 at 10:34 amFrancis,
Thank you so much for the compliment. I feel that I have to discuss pros and cons, and that is what makes me balanced. (Most of the time. (I AM human!)
David,
You’re correct; It can cost a little (or a lot) more money to buy an existing business-franchise or not. It may be worth it. Do the due.
The Franchise King®
Richard Bejah says
July 31, 2010 at 7:16 pmThanks for the information my new friend! RICH :0)
@OrganicGuru says
August 1, 2010 at 8:09 amA lot of people buy used businesses, so why not a franchise business? It is a GREAT way to reduce, reuse and recycle a business! How is that for going green?
The Franchise King says
August 1, 2010 at 5:19 pmRichard and @OrganicGuru
Thanks for reading and commenting on this post.
I really appreciate it!
The Franchise King®
Selling a Business says
August 24, 2010 at 4:38 pmGood article in relation to types of used franchises to invest in. By taking over a used franchise, the profit margin and existing customer base is vital in enticing qualified buyers to buy into such ventures. Thanks for the advice.