Four essential elements to consider when purchasing a franchise resale
Buying a business requires a lot of research. You should never take such a big step without first knowing and understanding all there is to know about the business you’re investing in. If your interest is piqued by a franchise resale, you will need to expand your research to include the franchise itself, as well as the business.
Due diligence is an important stage of buying a franchise and a good franchisor should support you as you explore the opportunity. Here’s what you should be looking at:
1. The franchise
If you’re interested in a franchise resale, you’ll not only need to consider how the business is performing but also how established and well known the franchise is.
You can learn about the success of the franchise by looking at how well - or not - the best and worst franchises performed. The reputation of the franchise is important, so look at how it’s perceived by others in the industry, as well as potential customers.
It’s important to consider whether your values and ethos will match with the brand too. The business you want to buy might be fantastic, but if you become a franchisee and then discover you cannot get along with the franchisor, it may not end up being the journey you were expecting, which will have an impact on your business.
2. Why the business is for sale
No matter whether you’re buying a business or a franchise, one thing you must take into account is why it’s up for sale.
Most business owners who are selling will be up front about this. More often than not, the reason for sale is retirement or a change in personal circumstances, such as illness or relocation. If there is no reason given for the sale, do more research and ensure that it is or has the ability to be a viable business opportunity.
3. Initial and ongoing support
One of the benefits of becoming a franchisee is the support you’ll receive from the franchisor. You should take into consideration the level of support you want and compare it to the level of support the franchise offers. If they’re poles apart, you might want to consider a different business within the franchise sector.
4. Size and make-up of the territory
The rules regarding territory vary depending on the type of franchise you’re buying.
You should understand what’s included in the territory and where it ends. Consider the potential customer base, footfall, demographics, visibility, competition and customers’ accessibility to the services you’ll be offering in the area. Having this knowledge will help you understand the potential for business growth.
Ask the franchisor whether the franchise offers exclusive territory rights, in order to prevent other franchisees within the same network from trading within the same area as you. Sometimes the business can actually work better without a defined territory. So don’t just assume no defined territory means you’ll be working against your neighbouring franchisee.
When all your research is complete, I’m sure you’ll find what you’re looking for. The franchise sector in the UK has something for everyone, so happy hunting.
Julie Taylor is CEO of Franchise Resales