Process of How to Buy Existing Resale Franchise Units

See below the video for a bullet point summary of the video

• Selecting the Right Franchise to Invest in:
  • Does the franchise concept suit your skill set?
    • Retail versus B2B (Business to Business) demand different skills and personality traits to successfully operate.
    • Even different retail businesses require different skills and strengths, so make sure to choose a franchise that suits who you are.
  • Do you meet the financial qualifications of the Franchisor?
    • Most Franchises have clearly minimum Total Net Worth & Liquid Capital Amount requirements
• Investigating the local market
  • Is the local market that you are considering actually a good market for the franchise brand?
  • Are new stores opening in the area or are they closing?
• Negotiating The Purchase Agreement
  • How much is the Franchise Transfer Fee?
  • Who is going to pay it?  The buyer, the seller or a 50/50 split?
  • How much time is left in the current Franchise Agreement?
  • Are there going to be Upgrades required to unit locations?
    • If so, which upgrades and how much will they cost?
    • Will you get a discount on the purchase to offset upgrade costs?
• Due Diligence
  • Unlike with buying a new franchise, when you buy an existing franchise business, you get Financials to review, to see hard numbers.
  • Franchisors can’t make representations about Profitability of new units.
  • Is the existing lease affordable & favorable to the profitability of the store?
• Purchase & Takeover Timeframe
  • Closing Escrow won’t happen until the franchise training is complete.
  • Where will be training be held?  At Corporate headquarters, at a local unit, or the unit(s) you are attempting to purchase?
  • When will Franchisor Training be?  Find out the schedule, as the upcoming trainings might be full, which could delay the closing of your escrow by weeks or even months.
  • How soon after taking over will any upgrades be need to be completed?
• Additional Benefits
  • Potentially easier to qualify for bank financin Due to having existing financials versus trying to open one from scratch.
  • Support from the seller, in addition to the standard support offered by the Franchisor

   

For assistance with analyzing different franchises to suit your situation, contact our office for an appointment.  You can reach our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com