15 Important Tips for Buying a Running Franchise

If you are exploring ways to start a business then a franchise business is a good option.

Even better, look for a Running Franchise Business. That way you don’t have to go through the hassles of starting up the business from scratch, it is already well established, with regular cash flow and customers.

However, you need to check for certain important things.

Tip 1: Do Franchise Research

Even if you are buying an existing franchise, you need to research:

• If this is indeed the right franchise for you
• The reasons for selling it
• The business opportunity
• The franchise location
• Brand reputation and more.

Tip 2: Evaluate Franchise Operations

If your research reveals that operational deficiency is the main cause for selling the franchise business, then find out if it will be an ongoing issue.

You can still consider buying the franchise if you are confident about managing the associated issues.

Tip 3: Extract Every Possible Information

Many of the owners are not likely to lend much of a hand after they sell their franchise business. That's why it is important to spend time and learn as much as possible from the previous owner before you complete the buying process.

Tip 4: Know that you are not the Decision Maker

Even if you have found the right franchise business and done your research, the franchisor still needs to approve the change of ownership.

Most franchisors will look into your skills, goals, plans, financial capability, etc. before approving the sale.

Tip 5: Understand the Franchise Agreement

Once the franchisor agrees to sell the franchise business to you, make sure to understand what is in the franchise agreement.

You need to know whether you will be signing a new franchise agreement or taking over the previous franchisor’s agreement. 

Tip 6: Take Help from the Experts

Before committing to the franchise agreement, it is advisable to vet the documents with legal professionals.

Remember, after you sign the document, you need to live with the terms mentioned there. 

Tip 7: Audit 

Before signing, you always need to cross check if the information provided to you is correct or not. 

Hire a professional to carry out various audits like account records auditing, customer audits, etc., in order to verify the information.

Tip 8: Know Your Inventory

The next step after you are satisfied with the agreement and audit is to prepare an in-depth list of the inventory associated with the franchise sale.

It should include everything, from board pins to the equipment and software.

Tip 9: Be Ready to Immediately Take Over the Franchise Business

When you plan to buy an existing franchise, you need to be ready to immediately take over running franchise operations.

It makes a difference if you have experienced staff and a reliable supplier base, in order to operate the business efficiently.

Tip 10: Focus on Staff Interaction

One of the challenging factors that you face when buying an existing franchise is existing employees. You need to have a clear staffing plan before you finalize the sale.

Tip 11: Introduce Yourself to Existing Customers

Another important task after buying the franchise is to introduce yourself as the new owner to existing customers.

Make sure that every customer is aware of the ownership change when they visit the business.

Tip 12: Introduce Your Own Business Culture

It is not mandatory for you to follow in the footsteps of the previous franchise, if you have more innovative ideas.

You can make changes in the business, provider the franchisor too is in agreement. 

Tip 13: Seek for Owner Financing

If you need funds to pay the seller, you can seek some financial assistance, which may reduce your tax burden as well. 

It is not advisable to invest all of your savings in buying a franchise. Save some cash liquidity for unforeseen expenses. 

Tip 14: Check for Owner’s Support

Check for available help and assistance, other than the initial training provided by the franchisor. 

Some franchisors often assign a separate team to assist new owners. 

Tip 15: Expect the Unexpected 

You might have done thorough research, audit, and planning, yet there may be unwanted surprises in store, like a list of customers who requested a refund, unpaid advertising bills, pending taxes, and more. 

Before buying a franchise business, you need to be mentally and financially ready for such surprises.

For more information and tips on Buying an Existing Franchise, Contact Us.