- Why Would You Want to Buy a Franchise?
- Who Should Consider Buying Franchise Opportunities?
- Should I Buy a New Franchise or an Existing Franchise?
Why Would You Want to Buy a Franchise?
Franchising is a method of doing business by which a franchisee is granted the right to engage in business under a marketing plan or system prescribed and controlled substantially or in part by a franchisor and to make substantial use of the franchisor’s trademark, name, logos, or advertising.
The benefit of buying a franchise is that much of the work has been done for you. Generally, you are given the product or service ready to sell. Often, the equipment, systems, policies, and procedures have all been laid out by the franchisor. The raw materials you need to produce your product or service is often available from the franchisor.
Buying a franchise is less risky than starting a business from scratch, since the franchisor has experienced (usually many times over) the pain of getting started. You bring your cash and hard work, and the franchisor will lay out the roadmap to success. The cash requirements and total outlays vary greatly but must be disclosed by the franchisor in the franchise prospectus. Alpine Business Brokers has a variety of new and existing franchise opportunities that may interest you. Call us today for a current list. Click here to view the list of new Franchise Business Opportunities online. Click here to view the list of existing Business Opportunities in Utah including established Franchise Opportunities.
Who Should Consider Buying a Franchise?
- Those who have never started their own business. A franchise gives a carefully structured business format, training, and support from an experienced source. If you are not sure you’re ready to start a new business but want to strike out on your own, a franchise may be the answer for you.
- Those who have strong financial resources. Since buying a new franchise is much like starting your own business, in addition to having to pay the franchise fees, you will probably experience negative cash flows for the first few months. You should have the financial resources to make it through those months. Alternatively, buying a franchise that’s already established is much like buying a business and can have established cash flows already in place.
- Those who have come from the corporate world where they are used to structure and organization. Buying a franchise can ease the transition from corporate to private enterprise.
Should I Buy a New Franchise or an Existing Franchise?
The benefits of a franchise can be obtained through the purchase of either a new franchise or an existing franchise from a franchisee that’s already up and running. Each option has its benefits and potential drawbacks—
When you buy a new franchise . . .
- cash flow takes time to develop
- the purchase price is lower, but requires more cash
- a customer base must be established
- the franchise fee must be paid
- the franchisor will often have financing available
On the other hand, when you buy an established franchise . . .
- cash flow is established and predictable
- the purchase price is higher, but more leveraged
- a predictable customer base already exists
- you pay a lower transfer fee instead of the franchise fee