Should You Buy a New Franchise or an Existing One?


FranNet’s blog is a place for budding entrepreneurs to check in twice weekly for inspirational content about becoming your own boss. We know that there are thousands of individuals out there who are plotting this course in their personal lives and we hope to provide them with helpful insight along the way. In this edition, we pose a legitimate question—should you buy a new franchise and start from scratch? Or, quite possibly, should you scour the streets to see if you can’t put your money down on an existing franchise operation? 

As with most subjects we cover, there are two sides to the story. In keeping with our commitment to preach caution and due diligence, we’re going to offer you a nice set of pros and cons. The decision will ultimately be left up to you, but here’s hoping this information will be a thought provoking exercise.

Advantages of Buying a New Franchise

If you decide to begin the investigative process with an aim of opening your very own franchise, you’re going to be in the driver’s seat for a lot of key decisions that may matter to you a great deal. Such as, you may want the final say in exactly which franchise you’ll choose to operate. Another question to ponder--where will my franchise be located? Ostensibly, you will be looking to choose a territory with a site selection/lease convenient to you and your lifestyle. 

Disadvantages of Buying a New Franchise

Depending on the type of franchise you’re interested in owning and your capital position, you likely won’t have the upper hand in negotiating a lower price to begin your business operations. You’ll also have to build up a customer base of your own—possibly from scratch. In all fairness, you likely already knew this fact.

Advantages of Buying an Existing Franchise

To turn a phrase, you just might find a deal out there. Many people avoid buying brand new cars, opting instead for models one-to-two years old for the same reason. There’s much more room to negotiate with an existing franchisee looking to sell their business. In addition, if the franchise is already a successful operation, you get to inherit customers, reputation and possibly even a complete staff.

Disadvantages of Buying an Existing Franchise

There is that one lingering question, isn’t there? Why, exactly, is this existing franchise owner looking to sell? You should maintain a healthy dose of skepticism when you ask probing questions on why someone is looking to get out. While the exterior façade may look shiny and well-kept, it doesn’t mean that the books and balance sheet follow suit. Get to the heart of the matter and make sure you have a clear understanding of the circumstances which led to the sale offer.

Regardless of your preference when you enter the franchise investigative process, there’s certainly nothing wrong with looking at both options. You can easily state your preferences and discuss this with a franchise consultant, such as the ones we employ right here at FranNet. We’ll be there to guide you in your decision making process and can even help you create your own personal pro and con columns.

As with all things weighted by importance, we preach the suggestion to retain professional counsel in both the legal and accounting arenas to help shepherd your thoughts and decisions. Whether you ultimately buy a new franchise, or score the deal of a lifetime on an existing business, we want you to succeed.

Trust us when we say, when you look good, we look good.

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Let’s chat! There’s a local FranNet consultant right in your market who knows that market inside and out – knows the personality of the market – knows the competitive landscape. FranNet has a great track record of assisting individuals on their path to entrepreneurship, and one of our franchise experts would love to provide you with guidance free of charge. Sound like something you might be interested in? Get started here and find your local consultant right now!


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