Positives and Negatives of Buying an Existing Franchise

If you are considering your next business move, you are probably looking into buying a franchise as a possibility. However, it can be overwhelming at first when trying to evaluate your options. So here is a look at the pros and cons when you buy an existing franchise:


positives negatives of buying existing franchise business

Cash Flow In Place Already

Before looking into buying an existing franchise, you will want to know about the financials you will have already when you start. Financials are key to business, as your expenses must be lower than your income if you are going to turn a profit and make the endeavor worthwhile. This is especially true if you are the owner.

Many times, existing franchises will have a strong cash flow, especially since many owners sell to their friends or family members and there is an element of trust built in. Still, do your due diligence, as cash flow can easily be a con if there is a lack of it.


Staff Already Established

Knowing who is on your new team is going to be crucial. The business is made up of people, and you are only going to be as successful as your team. If the previous ownership had amazing team members and great training, then this is a huge benefit of owning an existing franchise for you.

You won’t have to go through the work and expense of hiring everyone from scratch. However, make sure to have interviews with the staff and evaluate their attitude and performance. If you are inheriting a team that isn’t motivated or professional, it will turn into a con really fast.


Reputation Has Been Established

The reputation of the current franchise you’re buying can either be a pro or a con. This all depends on the standing they have in the community. A great reputation in the area means that you can ride off of that momentum from day when once you buy the franchise.

reputation of existing franchise business

However, there can be cases where the ownership previously ran the company in such a way that many local customers have a bad taste in their mouths. You need to be careful, as this could be hard to overcome. Once people have a first impression they tend to stick with that. So observe the online reviews of the franchise in that area and even consider reaching out to current and past customers to gauge their response.


Research is Vital

Don’t take everything at face value. When purchasing a franchise that is already running, you need to look at a variety of factors to ensure it is a good investment. This includes the financials, employee attitude, employee satisfaction, and the reputation they have locally. That way, before you sign anything you are making sure all the pros outweigh potential cons.

When it comes to making the right business decision, you need to be armed with as much information as possible. Buying an existing franchise can be one way to have a lot information at your fingertips before you even start. That way, you can focus on the growth and sales instead of reinventing the wheel. So evaluate the advantages and disadvantages above and consider if hitting the ground running is right for you.