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Why Buying a Franchise Resale Makes Economic Sense

Higher chance for success through brand awareness
Most franchise businesses, especially re-sales of existing locations, have a customer base that is loyal and comfortable with the pre-existing corporate image. Few people like to risk their consumer dollars on an unfamiliar company product or service. This is particularly true if and when a familiar franchise with similar qualities or prices already offers that value. This brand awareness creates the potential for higher sales and lower marketing costs, both factors that increase the likelihood of success.

Proven systems and standards in place
Franchises already have established methods of doing business. Through the test of time and competitive challenges, these systems are proven to increase sales and productivity. This lessens the guesswork, eliminates the lengthy learning curve, and reduces costly errors. In the end, these reductions mean more time for focusing on the true business at hand, customer service and satisfaction, higher sales, and higher profit margins.

Initial and continuing operational support
Throw the “fear of going alone” out the window! Franchise companies have professionals dedicated to ensuring that franchisees have the support to get started. Indeed, as part of their growing franchise family, your new membership means you will have experienced staff to walk you through the shaky moments, in the beginning and ongoing throughout the years, whenever you need assistance. You will always be able to pick up the phone and reach supportive members of the franchise family.

Training programs and reference materials
With operational support comes training programs to assist you and your employees with standards of success. Since the franchisor has a vested interest in raising positive brand awareness, your success is important. For this reason, franchisors offer ongoing training, the sharing of new, cutting-edge techniques, system upgrades, service enhancements, and product developments.

Easier access to financing
Since many businesses fail from undercapitalization, access to financing is important. Obtaining financing is much easier for a franchisee because banks recognize the business brand and model of most franchisors. Banks know they have a better chance of receiving payments with interest from a business with a proven model and support system in place.

Marketing assistance provided
If you’re buying a brand new location or a franchise on re-sale from a retiring owner, either choice will require marketing. The franchisor provides assistance with proven marketing strategies for retaining and attracting customers. Frequently, franchisors conduct their own advertising and promotion on the national level without much or any cost added to the franchisee. In addition, staff usually helps with marketing plans and promotions for grand openings.

Economy of scale increases purchasing power
Because franchisors make large-scale purchases, prices for everything can be lowered significantly. This commonly includes uniforms, supplies, equipment, and even construction materials for a new location. Since relationships are previously established, bulk purchases or consignment acquisitions are more readily available.

Territorial rights
Franchisors understand the reductions in sales caused by competitors. For this reason, most franchisors will agree to prevent the same franchise brand from opening within close proximity to the franchised location. Franchisees enjoy these territorial guarantees for as long as they own the franchise.

Lessening risk of failure through FTC mandates
The Federal Trade Commission (FTC) helps lessen the prospective franchisee’s risk by mandating franchisors to provide crucial information about the business prior to signing a purchase agreement. This information includes any litigation, audits, aspects of the company’s history, and the names of other same-brand franchise owners and their contact information. Mom and pop businesses don’t have such an inside advantage.

General peace of mind
There is a general lessening of anxiety in belonging to a professionally organized team. Yes, you do have to pay fees to the franchisor for the goodwill of a brand name, but the advantages listed above clearly offset those fees. Why? Even without considering all of the cost savings of marketing support and bulk-supply purchasing, the costly mistakes of an independent business owner are where the real expenses accrue. A smart business owner would much rather pay a fee for experience, support, and brand recognition that prevents expenses many times that amount from otherwise avoidable mistakes. Buying and operating a franchise just makes more economic sense.

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