Buying a Franchise The advantages of buying a franchise resale

Ifyou are looking to buy a franchise you should give consideration to a resale. There are many benefits of investing in a franchise resale, so let’s look at some of the key reasons why they are becoming increasingly popular.

Author: Emma Ozenbrook, Operations Manager at Franchise Resales

Firstly, a franchise resale skips the set-up process associated with buying a new franchise; this can usually involve a significant amount of money with a lot of hidden costs which you may not have even considered.

W ith a resale most of the groundwork has been done for you For example:

● Finding a suitable location.

● Building the foundations of the business

● Staff recruitment

● Growing a customer base

The owner before you established the business, now it’s your turn to help it grow. The business you are investing in may have been running for some time and may even have a loyal and established customer base Franchises often gain customers by being part of an established brand but maintain customers by providing a consistent service.

This is a huge benefit of buying a franchise resale as you have a ready-made customer base and the worry of finding customers is diminished – they are already there

When you start a new franchise marketing costs can spiral as you attempt to make a strong customer base to take you to profitability, which means with a resale you should break-even much sooner and start making profits in a shorter time frame.

Staff recruitment

In the current climate recruitment is becoming increasingly difficult W ith a resale, they’re already fully staffed and completely operational. This is a particular bonus if you find that you get on well with the team in place and don’t need to make changes.

Finding the right employees, training them and providing operational experience can take a lot of time and effort, so it’s understandable that so many potential nchisees find the ide nchise so enticing

W ith the proven track r business, the banks oft favourably at lending m easier to fund your new than if you were to star scratch.

W ith everything alread franchise resale allows growth of the business owner may not have ha

If you ’ re starting a business from scratch, it can be difficult to distinguish its strengths and weaknesses, however, with a resale you can take a strategic view of the business and implement plans to achieve your visions. n

About the author

Emma Ozenbrook initially trained as a pre-school teacher, a role she enjoyed for six years, but as her children got older she returned to university and graduated with a degree in English Literature emmao@franchiseresales.co.uk www franchiseresales co uk

After graduation, Ozenbrook worked in an Office Manager role until, in 2019, life guided her into the world of franchising through her partner, Michael Bohan, at Franchise Resales.

Ifthe past few years have proved anything, circumstances can change at the drop of a hat when you own a franchise. Preparing for foreseeable expenses such as quarterly VAT bills, your management service fee, or corporation tax can be accounted for in the business plan.

Author: John Hatt, Managing Director at Business Partnership

Unforeseen situations, like the pandemic or Brexit, can leave your business with serious long-term cash-flow issues and affect your return on investment, which ultimately forces some franchisees to sell

Accepting that your business has started to fail is always difficult, especially when things go wrong that are out of your control You will have thrown your full weight behind ideas and strategies to turn things around, but, unfortunately, nothing has been able to pull you back from the brink, and now there is no option other than to sell.

There is, however, still hope of getting a reasonable price for your business

Valuing a failing franchise

When selling any business, the first thing to do is find its value. When valuing a franchise that has started to fail, an excellent place to start is to find out the total cost of a new franchise, including the price of the business and any required investment in equipment or refurbishment of the building This is an entry point for anyone interested in that franchise.

y g contracts and well-maintained equipment or other similar assets can help the price of a business

If the franchise you are trying to sell is growing and the turnover is increasing but currently unprofitable, you will need to provide some forecasts to show that the future is looking better. Suppose your business has faced temporary issues, such as roadworks which reduced footfall to the business but is expected to recover to previous profit levels soon.

In that case, you might take a 15 per cent discount from your valuation. You will then be expected to provide historical accounts and fully explain the situation to give the buyer a full understanding of the circumstances

I recommend researching your industry ng the sale of your failing , it is crucial to have all the our sale. Selling a business is nsitivity, as well as grit. d finding out what other struggling sinesses have sold for. Do not forget ere will be additional franchisor administration costs for whatever value you arrive at If that tips the balance of funds into a negative, you could also estimate the business’s liquidation value

If that is the case, the safest thing to do would be to speak to a professional insolvency practitioner who can advise on this.

How to maximise your sale price

To ensure you succeed in negotiating the sale of your failing business and get the very best deal, it is crucial to have all the necessary skills required to close your sale. Selling a business is a process that takes finesse and sensitivity, as well as grit.

Despite you being on the back foot when selling a failing franchise, you should never let on. First, I recommend you set out clear negotiating goals for selling your business

About the author

John Hatt is Managing Director of Business Partnership, a national franchise network of regional offices connecting business sellers with business buyers.

With over 20 years of experience helping businesses sell quickly at maximum value, Hatt understands the practical and personal issues involved in selling a business.

www business-partnership.com to help you answer critical questions and guide your negotiations when selling. Then put together a negotiation strategy By being proactive and planning a strategy, you will stay ahead of the curve

Also, when in communication with a buyer, despite the fact that you need to sell make it clear you are willing deal if it is not up to s always try to lead the you will be in the driv the sales process

It is also crucial to en numbers and everyth accounts. Have you e Den when the perso p g remember his figures? Never be that person

A prospective buyer usually requests to see records of three years ’ worth of trading, so even if it’s a while off selling, make sure your accountant can advise on how best to present statements. Items of interest could be increased profits, a consistent but varied client base, and regular revenue growth prospective buyer. Following these tips, you should have no problem maximising the sale price of your franchise n

Finally, when it comes to selling your franchise territory, believe in yourself! Your business has not started failing because you are a bad owner; it started failing because of events no one could predict If you are not upbeat, positive and, most importantly, passionate about your franchise, it might be more difficult to sell the business.

Keep in mind all your business’s best assets and ask yourself what would interest your