Franchises in general are a hot ticket, with Canadian franchises
like Firehouse Subs and Mathnasium Learning Centers dominating
Entrepreneur Magazine's recent fastest-growing franchise list
(http://www.entrepreneur.com/article/241670). But another type of
business sale involving franchises, resales, is also becoming a
significant industry trend across North America.
A franchise resale can happen for many reasons, including:
- Franchisee owns many locations or varied types of businesses
and is downsizing.
- An owner has decided it’s time to retire.
- The franchisee started the business with selling at the right
time the ultimate goal all along.
- Some franchisees will find the business model is not right for
him or her, or life changes have made selling the best option.
These resales can provide a great opportunity for an incoming
prospective franchisee. Since the location has already been opened
and is up and running, there's no start-up hassles and a developed
customer base is in place. The advertising has been sorted, and the
business is ready to generate income for the new owner right at the
start. For some new franchisees, the ability to takeover an
existing business and work toward keeping current customers and
attracting new ones without having to make major decisions are huge
The Resale Downsides
The Resale DownsidesWith all the positives of buying an existing
franchise location, there’s also the potential negatives. A
business that is already turning a profit has more value than a
location built from scratch, so the buyer will have a higher cost
overall going in. Valuation is key here, according to the Canada
Business Network (http://www.canadabusiness.ca/eng/page/2854/), as
the franchisee must ensure he or she isn’t overpaying for the
Another potential issue with franchise resales is the location’s
reputation and current status. Even a location turning a decent
profit can be an under-performer, depending on how well the seller
did. This scenario does present the new franchise owner an
opportunity to energize the business and maximize profits.
If you’re interested in resales, start by contacting the franchise
that attracts you, as many companies have resale lists. Check out
the listings at BetheBoss.ca for more information on hot franchise