When weighing up a new or existing franchise purchase, consider history, management and goodwill. Franchise expert Derek Cafferata shares his thoughts on franchise purchases.

Sales and Profit History

One of the greatest benefits of buying an existing franchise is the ability to see accurate sales and profit history on the business. There is no guessing how successfully, or unsuccessfully, the business has been performing.

“The ability to analyse sales and profit history on a business offers a potential buyer peace of mind,” says Derek Cafferata, CEO and President of All State Franchise Finders. “Knowing the financial history of a business helps to predict its potential future.”

An existing franchise also gives room for some possible negotiation on price. With a new franchise, purchase costs, setup fees and franchise fees are relatively set, with little room to move on price. The ability to analyze business performance may open up room for negotiation on the purchase price.

Existing Management

Buying an established franchise business means existing management policies, procedures and systems are already in place, along with all experienced staff. As a new owner of a resale franchise, it means you can walk in on day one and everything will continue to run as it did the day before.

Derek understands that for many new business owners, this is a great benefit as there is no need to set aside finance for the start-up period you would normally need for a brand new business.

Another advantage of buying an existing franchise is that financing can be easier because the business is already set up and running. Staffing, management, systems and a customer base is already in place. Lenders are more likely to lend on something that has proven itself to perform and earn income.

Established Customer Patterns

Understanding the established customer patterns of a resale franchise is important for the new business owner. These customer patterns help to identify whether the business has goodwill within the local area and among its target market.

“Poor goodwill is not necessarily a negative when looking at purchasing an existing franchise,” says Derek. “It may create an opportunity for a new owner to capitalize on this and increase profits over time.”

Improving the goodwill of any business is a great way to increase the value of that business, something many entrepreneurs enjoy the challenge of. When looking at purchasing an existing franchise, it pays to look at the franchise unit in context with the entire franchise brand as a whole. If the franchise brand has a good reputation and is considered a market leader, this gives great potential for an underperforming franchise unit to improve its customer service, win back customers and attract a new customer base.

Seek Advice from a Franchise Expert

Anyone considering purchasing a franchise should always seek the assistance and advice of a franchise expert. Derek Cafferata and his team at All State Franchise Finders work with potential franchise owners, helping them through the lengthy and often daunting process of franchise selection, financing, setup and establishment. With more than 30 years’ experience in the franchising industry, you can rest assured that you are in good hands with All State Franchise Finders. If you are considering purchasing a new or existing franchise, contact the team on 1-800-544-2161 or visit allstateff.com today. All State Franchise Finders – your franchise experts!