Last Updated: 21-January-2014
I’ve been looking at two local franchises for sale …they are both in distress.
Should I avoid them or embrace the opportunity to get them at such a low price?
Well this depends on a few things. If you are an experienced business owner, a franchise resale in “turn around condition” may deliver a huge opportunity to take advantage of a deeply discounted cost of entry…..make it a huge success.
This option only truly exists when current owner is not running the franchise in accordance with the method developed by the franchisor.
If you find that a majority of other franchisees in the system are following the recommended plan of operation are successful and if there are no other glaring issues like a lease or location issue, then you can move ahead in the process with some confidence that this could be your ‘diamond in the rough’.
Of course, once you are on the path to seriously making an offer you need to go to the franchisor and carry out a thorough examination of the franchise yourself. You need to confirm that the financials and specific information about the location that you have received from the seller correspond with the franchisors records.
Spend the time and money in hiring a financial expert and a lawyer to assist in the transaction. If you cover all the bases and go in informed…a distressed resale could be a great bargain.