New vs. Existing Franchises

As a potential franchisee, you have the option of becoming a franchisee in a new facility at a new location or purchasing an existing franchise.

A new franchise will mean everything is current, clean, and under warranty- but for a higher price tag, of course.

An existing franchise will involve a smaller investment and thus, will allow for a greater possibility of financing. However, it is important that you assess the seller's reason for selling. Is the business not performing to expectations because of poor management, poor location, poor support from the franchisor, an indifferent staff, outdated equipment and/or facilities, etc.? Be wary of what the seller or broker tells you. After all, they are trying to convince you to buy the business!

Regardless of the obstacles and the extra caution you must take, considering a "used" franchise is worth your time. Use the same analytical tools you would to a new franchise. Do your homework. Be thorough. Be unrelenting.

Next: Agreement Negotiation