Guiding Steps to Buying an Existing Franchise
If you want to enter the franchising business and quite luckily, somebody is selling his ownership to you, it can be very tempting to just jump in the waters without thinking deeper about it. For you not to do that, below is a guide on how you are supposed to buy an existing franchise.
Follow the steps provided for your own protection:
Talk to the franchise owner and ask his reasons for the sale.
Given that you already have a franchise business being sold to you, it is very important to know the reasons why it is for sale. On the other hand, if you’re on the lookout for an existing franchise for sale, the best place to find one is through the classified ads, right under the business for sale section. But regardless of how you got wind of the sale, what’s important is that you convince the owner to tell you the true reasons why he’s letting go of the franchise – even if that reason is poor sales performance.
Evaluate the business.
Request for the books and tax records of the business and evaluate the numbers. If you are business savvy, you’ll see right away its actual cash flow. If you are not so sure about it, ask an accountant to review the numbers on your behalf. It is important for you to know if the trend of the business you’re about to buy is upwards or downwards. That also gives you a fair idea as to where you’re supposed to start once you’re at the helm.
Visualize a plan
Before you set yourself to buying an existing franchise, be sure that you have a clear idea as to how to take it forward. If the book says negative income, how are you supposed to reverse that? If the books say good profits, how will you maintain it? You must know the answers to these questions beforehand.
Get approved from Franchisor.
It is necessary for you and the existing franchise owner to involve the franchisor with the resale deal. This way, all the legal matters pertaining to the sale and the transfer of ownership will be handled accordingly. Expect to have lots of legal documents to prepare, evaluate, and sign. Be sure that your lawyer has copies of everything for further evaluation.
Make the final offer on the franchise and legalize the sale.
Existing franchises don’t come in fixed prices like new franchises do. So if you can have the asking price lowered a little bit more, do so. Once you and the existing franchise owner have agreed on a number, it’s time to facilitate the sale. Make the payment and sign the documents. The moment the sale becomes legal, you become the rightful owner of the franchise.
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If you are interested in buying an existing/ resale franchise business CLICK HERE
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