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Are Franchise Resales Cheaper Than Buying A New Franchise?

The cost of a franchise resale will vary greatly, depending on a number of different factors, such as the type of franchise it is, the size of the franchise company and how long they have been in the marketplace.

The difference in cost between a franchise resale and a new franchise from the same company will also vary greatly, but will depend upon the different circumstances and reasons why the franchise is up for resale.

It is often the case that people who buy a franchise territory do so with the intention of adding value and building up a business over a certain period of time, say 10 years or so. They can then sell it on for a profit as part of pre-planned exit strategy. In these circumstances a franchise resale will be significantly more expensive than a new territory, because you are buying into an established business with an established client base, which someone else has taken the time to build up so you do not have to.

Similarly, there are also times when a franchise resale may cost less than a new territory from the same company. Since the recession hit around 2008 the market has changed and it has become a lot harder to build up a business. As a result there are many more ‘turnaround’ franchises available, where the owners have hit hard times and been unable to make a success of their franchise business, or have simply not had the energy to put into building a business during hard times. Turnaround franchises can be an excellent opportunity to buy a franchise business at a reduced price, however only if you are prepared to put in a lot of hard work to build it up once again.

Whether you are looking at purchasing an already established franchise resale, or one that has hit hard times and needs to be built back up from scratch, it is very important that you fully research the various options in the market and take all appropriate advice available to you.

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