Written by: admin on June 27, 2013 @ 3:12 pm
If you’re looking for a great launch pad to owning a small business, a franchise can be an ideal place to blast off. We’ll help you reduce the hemming and hawing over whether to buy a new or existing franchise.
Becoming a franchisee can be a great path to entrepreneurship. Franchisees leverage the strength of an established brand and a tried and true business model while the franchisor serves as a source of capital—an asset that is particularly welcome in today’s tight fiscal atmosphere. So how should you become a franchisee? Should you start fresh or set the quick trajectory of buying an business from a seasoned franchise entrepreneur?
Opting to Buy an Existing Franchise
There is a general sense among buyers that investing in an existing franchise location is easier. That may or may not be the case,
depending on the specifics of the location, but it’s true that there are several pluses of investing in an existing franchise as you chart the steps to purchasing a franchise:
An existing franchise opportunity can be a turnkey business acquisition. It’s already been in operation so the seller can demonstrate a performance history showing profitability as well as concrete numbers that will help you figure out it’s cash flow and make project future performance. These are two key elements in assessing value.
There my very well be a set fee structure for new franchise locations, which will impinge on the buyer’s ability to negotiate on terms or price. But buying a franchise business for sale puts you right across the table from the seller with more ability to negotiate the terms and maximize the return on your investment.
3. Client Base
An established and loyal client base is a massive benefit for a franchise entrepreneur. Existing franchise business for sale strikes a quick route for new owners to take advantage of an established customer since the franchise brand gives customers a sense of consistency, tapping into memories of positive experiences with the franchise brand.
Reasons to go with a New Franchise
With a new franchise location, you take on higher risks along with higher rewards. While every franchise business opportunity is different, new franchisees often find out that building a new location provides merits that simply aren’t available with an existing operation:
1. Lower Purchase Price
New franchise companies for sale are often a better deal because you aren’t buying existing cash flow from an established customer base and you aren’t paying for “goodwill” value often expected by sellers of existing franchises. If the new franchise is successful, you’ll reap the financial benefits of the franchise history, not the seller.
2. Tabula Rasa
A new business offers a fresh start to buyers; a franchise business opportunity unaffected by the habits, preferences and/or flaws of a previous owner. Although you’ll have to put your nose to the grindstone to forge your business in an untried community, you don’t have to worry about skeletons popping out from closets of previous businesses.
3. Pristine Infrastructure
When you buy a new franchise, it’s likely that your equipment and facilities will also be new or at least newer than they would be if you bought an existing franchise. Out of date equipment isn’t always a deal-breaker, but in some sectors it’s important to ensure that the business has reliable machines and current designs.
To learn more about fun business opportunities with High Touch High Tech, visit us online at ScienceMadeFunFranchise.net.
High Touch High Tech is the leader in innovative hands-on science and nature experiences for children, serving over 4 million children annually with 27 franchise locations across the United States, Canada, Turkey, Singapore and South Korea.Entrepreneurs, Franchise Investment, Franchisee, How to Build a Franchise Business, Pricing, Start a Business