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If a Franchisor Has Lots of Resales, Is This a Worrying Sign?

I am looking to purchase a local resale in my market from a large franchise system.  I noticed that they have a lot of resales available.  Without doing the math, I bet it is 5% of the system.  Is this an issue?  Should I be worried?

In a short word… no! There are a number of reasons why people may choose to sell on their franchise business, and while a handful of these may be down to negative circumstances, the majority will be selling for a legitimate reason after having enjoyed a long and happy time building up their franchise business.

Relocation can often force a franchisee to sell their business as it just isn’t viable for them to travel a longer distance every day or week to keep it going. They may even sell a franchise in one territory and then start up a new franchise within the territory they have relocated to.

The ageing population is growing, and any person who was employed would look to retire at a certain age – this is no different for franchisees. Most will feel the time is right to sell their franchise when they reach a certain age so they can sit back and enjoy their retirement.

When many people buy a franchise they often have a plan to build the business up to a certain level of profitability before selling it and moving on to their next venture. It may therefore be that a franchisee is selling their business purely as part of their pre-planned exit strategy.

As much as we don’t like to think about it, the death of a franchisee can also mean the sale of the business. There may be no-one suitable within the family to take on the day-to-day running, which will inevitably force the resale of the franchise.

These are just a few different reasons why a company may have franchise resale opportunities, but generally, the larger the franchise company, the more territories they will have available, and therefore the more resale opportunities they are likely to have.

A franchise resale often represents an excellent opportunity to invest in a business that has already been built up and is running successfully with an established client base. But the main point to bear in mind is that you should fully research the options available and ensure that you take all of the necessary advice before entering into any franchise agreement.

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