A franchise resale is essentially an established franchise unit that already has built a credible track record in the marketplace and community. The number one benefit of buying a franchise resale is that you will get not only a proven franchise system, but also a franchise unit that has an established financials, business operation and customer base.
Despite the huge benefit, you must heed the inherited issues that may become potential problems later on, such as:
Franchising and franchise agreement
One major difference between buying a franchise resale and buying a traditional business is the agreement. In franchising, you must enter into an agreement with the franchisor as brand and system owner. Buying a franchise based on track records only won’t get you too far – you need to consider the partnership possibilities between you and the franchisor.
Some questions need answering: Can you comply with the set rules? Can you nurture a relationship with your franchisor and the other franchisees? Are you comfortable knowing that you would ‘secretly’ compete with fellow franchisees? Also Remember – franchising embraces a top-down relationship; you must follow guidelines set up by your franchisor to succeed, and this usually involves doing things more your franchisor’s way instead of yours.
Business culture
You will, sooner or later, encounter problems with the established business system (and culture.) Your staffs will likely to have difficulties in adapting to your new policies, and you should expect a resistant in getting things done your way.
The key here is to choose a franchise resale that is fully ‘comply’ and well ‘aligned’ with the franchisors’ laid out plan. That being said, it’s probably better for you to buy a franchise resale coming out from the franchisor’s ‘incubator’ – a franchise unit that has been ‘realigned’ with the principles and policies of the franchisor.
Potential and profitability
Are you buying an established franchise that has a great track record or the one that is ‘unpolished’? This is probably the most important question to answer when buying a franchise resale. You must understand the reasons behind the franchise sales by the previous owner. Is the owner bailing out of a maxed-out franchise unit? Is the franchise unit somewhat ‘dying of an unknown disease’?
Forget about the numbers for a change – numbers could lie and misled you. You need to investigate the REAL reasons why the franchise is on sale before signing any agreements
Ivan Widjaya
Buying a franchise resale
