7 Tips to Buying a Business or Franchise for Sale

Will you achieve your dreams or plans for the future by buying a business or franchise?  Will this fit the lifestyle that you want?  Buying an existing business or franchise is advantageous because both have an established customer base and ongoing operations or an operations template.  Financing from traditional sources is also easier.  Below are tips in finding the right business opportunity.

1. Are you familiar with the products or services offered by the business?
What type of business do you want?  Does it match your background and experience?  Having some understanding of the business will lessen the amount of time you spend familiarizing with the product service, market and industry.

2.  Do you have the support of your family?
Running your own business requires a lot of time and effort.  There are some tasks that you cannot delegate to your employees.  Share your plans with your family, so they understand and support your commitment to the business.  

3.  Did you research the market and analyze the competition?
Does the public or consumers prefer the product or services offered by the company over the competition?  Make sure there is continuous demand for the product or service.  Does the business, its products or service have a good reputation?  Find out what attracts customers to the competition.  What are its weaknesses?  How can you do better?  Before buying a franchise or business for sale, compare one to the other.  Choose which is better for you in terms of location, the working hours, the work-family balance, etc. 

4.  Do you have sufficient funds?
Franchises require franchise fees and start-up costs.  You also bear the advertising, insurance, taxes and royalty fees even when your sales are low.  Do not forget the salaries of employees, rent, inventory, and other operational costs.  Do you have enough money to purchase the business and run it?  It may take some time before you recoup your investment.  Have reserve funds for any unforeseen expenses.

5.  Why is the owner selling the business?
Investigate the real reason why the owner is selling.  Does this business have many liabilities?  Is it losing its key customers?  Is the company or owner facing lawsuits?  Is there a large competitor entering the market or area?  Are there demographic changes in the area that affect auto- and people-traffic in the coming months or year?  Are there changes in the tax code that negatively affect the business?

6.  Did you contact franchisees or business owners with similar businesses?
Business owners and franchisees offer a wealth of information that can benefit you.  What is the franchisor’s reputation or history?  Does the franchisor have a good track record for offering support to its franchisees?  Does the franchisor deliver supplies promptly?  It is to your benefit to know everything.  Discover the problems, if any, before signing the purchase contract.

7.   Did you get advice and assistance from experts?
Professionals with experience in selling a business – lawyer, accountant and franchise consultant – can make sure you pay the right price for the business.  Your lawyer can go over the legal records of the business to ensure it is free from liens and legal entanglements.  He or she can explain the provisions, clauses and conditions of the business purchase agreement or franchise agreement.  The accountant will see to it that you are buying a financially healthy business.  He or she can project the cash flow of the business.  Franchise consultants can point out the various franchise opportunities based on your field of interest, investment level and professional background. 

Follow the above tips and you will be on the right path to owning your business.  Take time to investigate and evaluate the business for sale.  Be confident that you arrived at the right decision. 

What is bothering you about the business or franchise for sale?

Leave a Reply