Discovery Point Blog
Choose the Best Franchise: The Pros and Cons of Buying a Resale
Have you ever walked by a successful business and wished you could jump into business ownership right away? If your dream is to own a business and you’d prefer to skip past the phase of building up a client base and establishing a reputation in the local area, you may find that the best franchise for you is a franchise resale.
Franchise resales offer an excellent opportunity for entrepreneurs, allowing them to go from prospective buyer to owner in just a matter of weeks. However, it’s important to do your research when considering whether you want to open a new franchise location, purchase a pre-existing franchise, or start a new business from the ground up.
Take a look at some of the reasons why purchasing a resale is worth considering, as well as the homework you’ll need to do to make certain it’s the best franchise for you.
Understanding How Franchise Resales Work
Before you do anything else, it’s important to understand what goes into purchasing a franchise location. When you buy a franchise resale, you are gaining ownership of a business that is currently in operation or has temporarily paused operations.
If launching a new location sounds a bit overwhelming to you, a franchise resale could be the best franchise for your personal risk tolerance. However, no business venture is risk-free. You’ll still need to conduct the same amount of research and due diligence as you would before investing in a brand new franchise location.
Why a Resale May Be the Best Franchise for You
Purchasing a resale enables you to get into the groove of business ownership while saving time, jumping over certain hurdles, and experiencing a number of key advantages. Examples of these benefits are included below.
A Simpler Financing Process
While you may still require capital financing, these funds will be easier to acquire when you have a concrete history of the business’s performance at your fingertips. Although there’s certainly no guarantee of future performance for any business, lenders are likely to have greater confidence in a business with a previous history of revenue than a new start-up.
A Short-Cut to Opening
Rather than waiting to choose a site, purchase the real estate, construct the facility, and obtain licensing, you can take the fast track to business ownership with a resale. Depending on the location in question, most variables should already be in place for a near-immediate opening including your client base, trained staff, state licensing, and local marketing campaigns.
New businesses often take time to start turning a profit as they begin to build loyalty in the community and develop streams of revenue. However, the situation is different with a resale. Having an established customer base at the ready can lead to higher revenue levels at a faster pace.
A Market-Tested Business
One of the greatest advantages of a resale is that you’re purchasing a business that has already been market-tested. If the brand has already become part of the local community and has gained recognition for quality services, you’ll have fewer concerns about whether the business will be successful in that particular location.
Balance the Positive with the Negative to Choose the Best Franchise
Of course, buying a franchise resale doesn’t come without a certain set of risk factors and potential downsides. As with any other business decision, it’s important to consider all possible outcomes to determine which path is best for you.
Some of the factors you’ll want to keep in mind as you research franchise resales are as follows:
- The price.
The cost of a resale can potentially be higher than opening a franchise location on your own, especially if the business has been very successful in the past. Ultimately, you’ll need to think about your own financial mix, priorities, and preferences to determine whether the purchase price is worth the quick revenue.
- Motivation for the sale.
There is always a possibility that the owner wants to sell the franchise due to issues they have not been able to fix, whether low profits, a less-than-positive reputation, or difficulty with retaining employees. While it’s equally possible that the owner is ready to retire on the ample profits they’ve made, it’s crucial to look into the other reasons why they may be making the decision to sell.
- Implementing change.
As the new owner of an existing business, you’ll be responsible for implementing change. This process comes with both positives and negatives. On one hand, you may bring new energy to the location that was lacking under the previous ownership and fix issues the former owner overlooked, thus unlocking new opportunities for revenue. However, you may also face resistance to change, whether from the employees or from clients. While the potential for resistance shouldn’t keep you from purchasing a resale, it should certainly factor into your decision-making process.
If you’re looking for the best franchise to own and think a resale may be the right option for you, learn more about the franchise resale locations available from Discovery Point! Call our franchising team today at 770-623-1140 to explore our franchise packages.