Why Buy Franchise Resales and 8 Steps to Get Started
Do you want to skip the startup hustle and own an established business? Franchise resales deliver instant brand recognition, established profits, and a loyal customer base—no learning curve or grand opening marketing required. According to a Guidant Financial survey, 23% of franchise owners opted for an existing location. Here’s why buying resale is a smart move.
Benefits of a Franchise Resale
If you are new to entrepreneurship and have the financial capacity to buy an existing business, a franchise resale offers many benefits:
- Established customer base: Buying a resale franchise means you inherit a location that has already built a reputation in the community, which can save time and marketing costs in attracting customers.
- Ongoing revenue: Resale often provides immediate cash flow from existing customers, which can provide a smoother transition and quicker return on investment.
- Lower risk: An existing location has a financial and performance history you can review, reducing the uncertainty of how the brand will perform in your area.
- Existing staff: Many resales come with trained staff and established operations, eliminating the need to start from scratch.
- Faster growth potential: Since the foundation is already in place, a franchise resale often offers the potential for faster growth and expansion.
How to Buy an Existing Franchise in 8 Steps
To buy an existing franchise location, follow these steps:
- Research: Like any business venture, you must do a healthy amount of research for franchise resales. Find the type of franchise that meets your financial and lifestyle goals. Ensure the brand is an outstanding company, like The Tailored Closet, which provides training, ongoing support, and top-notch marketing assistance.
- Analyze the FDD: If you’re considering a resale, the franchise disclosure document (FDD) will be the first to analyze. The FDD is a legal contract that will inform you about everything from fees and training to contractual agreements, support, and more.
- Check out customer reviews: If you are interested in buying a pre-existing franchise, it’s worth looking into previous customer reviews and the social standing of the business. Also, check certain factors, including current inventory, equipment, business standing, and assets. The American Society of Appraisers is a great resource to help you evaluate your new business opportunity.
- Meet the franchisor: The franchisor must approve the resale. Before you move forward, It’s crucial to determine if your values and business objectives align with the franchisor.
- Talk to ex-franchisees: Connect with the former franchisees to learn why they sell. Are they retiring, or was demand for the product or services limited in the area? There are multiple personal reasons why a franchise owner chooses to sell, but you need to learn the circumstances to make the best choice for your business's future.
- Examine the financial picture: If you are looking into purchasing an existing franchise location, you are likely looking for a business you can grow. By examining the financial records, you will learn where the franchise stands and whether you have any negotiating wiggle room.
- Sign a deal and pay the transfer fee: When purchasing an existing business, most franchisors require that you pay a transfer fee to cover the transfer cost and evaluation of the new owner. This fee is paid either by the seller or buyer and is usually a flat rate or a percentage of transfer costs.
- Attend training: Even though the business is already open, you’ll need to know the operational processes and administration. Attending training will give you the knowledge you need to be successful.
The Tailored Closet Is a Great Resale Option
Looking for the best home improvement franchise to open? Consider The Tailored Closet. An award-winning franchise with decades of service and more than 150 locations, The Tailored Closet is an excellent option for anyone hoping to jump on the franchising bandwagon.
To learn more about the resale and new franchise opportunities with The Tailored Closet, inquire now.