Key Questions to Ask When Buying a Resale in Canada

Buying a franchise resale is a big decision that demands a lot of commitment and planning. That’s why it should never be taken lightly. Just like with starting a new franchise, you need to perform your due diligence and make sure you have all the facts before you invest. Here are some questions that you should ask before buying a resale franchise.

Why is the Owner Selling?

This is critical and should be one of the first things you ask. There are many reasons why a franchisee might be selling. They could be retiring or moving, or they could simply be looking move on and work in a different industry. Whatever it is, you need to make sure they reason has nothing to do with the performance of the business. If the owner is basically jumping ship, that should be your cue to continue the search and find another business for sale.

What is the Net Income and Cash Flow?

A business cannot thrive if its earnings aren’t in the black, so finding out what its cash flow and net income are also of primary importance. A solid revenue record will allow you to make a cash flow projection for your business plan which banks will want to see when you look to secure financing. You should easily be able to find this out by reading the franchisees prospectus of sale. It outlines everything about the company, and you can be sure that it will be in the document.

Does the Franchise Have Any Liabilities?

If the resale franchise has any liabilities, you will have to take them over when you assume ownership. No one wants to have to carry burdens and make up for the mistakes of a previous owner, so make sure you won’t have to worry about this. Any and all liabilities will also be listed in the prospectus of sale.

How Long has the Franchise Been in Business?

The franchise resale’s track record is vital, and the longer they’ve been in business the more established they will be in the area. If they have been in the area for 20 years, you can be sure they are well recognized in the area and have a solid customer base. The longer the franchise resale has been around, the better of you will likely be.

Who is the Competition?

Before you go into business you’ll need to know who you’ll be up against in the area. Market research is essential to success, so if you know who your competition is you’ll be better prepared to handle things and keep the franchise running strong.

Is Anything Happening in the Area Which Could Affect Business?

Lastly, you should look into whether or not there is anything going on in the area that could affect your business. This pertains to things like road work, city infrastructure improvements, or new construction. Anything that gets in the way of people accessing your franchise is a potential problem.

These of the key questions to ask when buying a resale in Canada. Take a look and find a great resale opportunity in your area on Franchise Resales.