What are the Pros & Cons of Buying an Existing Franchise?
The easiest way to get started with your own business is to own a Franchise. You can either buy a new Franchise or opt to buy an existing one.
Here are some of the pros and cons of buying an existing Franchise.
Pros
01. Brand Reputation
If you are buying an existing Franchise then local brand engagement and reputation has already been created by the previous Franchise owners.
However, you still need to do your research to find out if the Franchise brand has a good reputation in your local area.
02. Ready Customer Base
With a running Franchise, you need not worry about customers. They are already engaged with the franchise.
But, you will need to build relationships with this existing customer base even as you pitch your business to new customers.
03. Trained Staff
An existing Franchise will also have trained staff.
There is no need for you to train them from scratch, since they will be well-aware of the business.
04. Clear Expectations
You will have an idea about the actual revenue of the Franchise, which helps in deciding if you are to stick to the same marketing plan or to make improvements.
05. Immediate Returns on Investment (ROI)
You are in a revenue earning environment as soon as you complete basic training and take over the business from the previous Franchise owner.
Cash-flow is instantaneous, which is not the case if you are starting up a Franchise in a new location.
Cons
01. Resistance from Customers
There is no guarantee that the existing customer base will take kindly to a change in ownership, especially if it is a customer-facing business like an eatery.
They can simply walk off from the Franchise, following the old owner to his new shop.
02. Issues with Existing Staff
Similarly, the staff would be in alignment with the previous owner and may have apprehensions about a change in ownership.
If you make drastic changes in work patterns, then expect issues.
03. Dealing with Old Issues
If the previous Franchise is working well and you are buying it, then you have an advantage. If not, initially, you have to deal with old issues. Unless these issues are sorted out, you will have trouble putting your business on the right track.
04. Change of Terms and Conditions
The Franchisor terms and conditions may not remain the same when you buy an existing franchise. You may have to renegotiate with the fees and terms again with the franchisor.
For more insights into the pros and cons of buying an existing Franchise, Contact Us