Franchises Resales on Fire

Author: Miguel Alvarado

Date: AUG 4th, 2015

Topic: Industry Experts

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 boons.

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 location.

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 opportunities today!