If your goals includes starting your own business or expanding on your current enterprise, chances are that you’ve already explored how to open a franchise and dreamed about building a business you can be proud of. But here’s a question many future franchise owners overlook: Should you buy an existing franchise for sale?
This option, known as a “franchise resale,” has both pros and cons. But for entrepreneurs who want a faster start with built-in advantages, it just may be the perfect opportunity. In what follows, we’ll explore the franchise resale industry, why opting into one can be a great fit, and how Neighborly franchise opportunities, in particular, can help new owners fast-track their way to franchise ownership and operation. This article serves as an excellent starting point for evaluating franchise resale opportunities.
What Is a Franchise Resale?
In basic terms, franchise resale refers to purchasing an existing business location or territory within a franchise system. Typically, this would be a business that’s already fully operational, including an existing customer base, staff, and local presence. When evaluating a franchise resale, understanding operating expenses is crucial to assessing ongoing costs and profitability. And while it’s not right for everyone, it can be a great way to avoid many of the early-stage hurdles of opening a new location.
In today’s business world, franchise resales are more common (and typically more promising) than you might think. According to recent data from Business Research Insights, interest in franchise resales is growing rapidly among today’s entrepreneurs. A big part of the reason behind this interest is an appreciation for the built-in stability and potential for quick returns that can come with the franchise resale model.
New vs. Existing Franchise: Which Is Right for You?
When it comes to business ownership, franchising or otherwise, there’s no one-size-fits-all. For example, some entrepreneurs love the challenge and blank-slate feel of a brand-new location, while others prefer to jump into something already built.
Starting a new franchise gives you the chance to shape the location, team, and customer experience. Your business reputation and success are entirely your own. New franchise opportunities can be especially attractive to new franchise owners looking to enter high-demand markets and capitalize on emerging trends.
But by contrast, buying a franchise for sale means inheriting existing systems, revenue streams, and often, a loyal customer base. It can be a great way to minimize many of the typical growing pains of starting a new business. Purchasing an existing franchise can be less risky than launching new businesses from scratch, as it often provides immediate cash flow and established operations. It can also mean adding a new business to an existing portfolio without many of the time-consuming aspects of a new franchise.
Want to dive deeper into this comparison? Check out our article on the Benefits of Being a Franchise Owner vs. Starting a Business Alone.
Why Would a Franchise Be for Sale? (It’s Not What You Think)
There are some common misconceptions about a franchise resale, not the least of which is that a resale must mean the business is struggling. In many cases, however, that’s far from the truth.
In reality, many franchise owners sell their businesses for personal reasons, such as retirement, relocation, or the desire to try something new. According to the 2024 ADFR Franchise Resales Data, more than 60% of franchise sales are due to lifestyle changes, not business failures. This means that a franchise resale is, in most cases, not a business on the brink of failure. For many entrepreneurs, this can be great news since franchise resale can help you launch your new business as quickly and efficiently as possible.
To browse current listings, get familiar with business valuations, and find resales in a variety of industries, check out platforms like BizBuySell, FranchiseResales.com, and the Franchise Growth Network.
Top Benefits of Buying an Existing Franchise
There are many advantages to buying an existing franchise. Some of the key benefits of a resale include:
- More immediate cash flow: Resales can be already profitable, or close to it, allowing you to start earning sooner.
- Established customer base: You don’t have to build trust or a reputation in your community from scratch.
- Trained staff and systems: Hit the ground running with an experienced team and operational tools already in place.
- Reduced ramp-up time: You’ll spend less time setting up and more time growing the business.
- Local brand recognition: Your community already knows the name and services, giving your business a competitive edge.
- Proven business model: Purchasing an established franchise provides a proven business model and operational structure, helping to mitigate risk and facilitating a smoother startup process.
Additionally, with a Neighborly brand franchise business, you also get ongoing access to comprehensive training and support, making the transition of ownership even smoother and more successful.
Understanding the Franchise Transfer Process
When buying an existing franchise, the transfer process is a crucial step that ensures a smooth change of ownership. This process involves the sale of the franchise from the current owner to a new buyer, but it’s not as simple as a standard business transaction. The franchisor plays a central role, as they must approve the new owner to ensure they meet the standards and requirements of the franchise system. As a buyer, you’ll need to move through the franchise owner approval process.
After your resale purchase is approved, you’ll work closely with both the seller and the franchisor to review all terms of the sale. This often includes a transfer fee, which covers the administrative costs of updating the franchise agreement and onboarding the new owner.
Additionally, understanding the details outlined in the Franchise Disclosure Document (FDD) is essential. This document provides valuable insights into the franchise system, including fees, obligations, and the rights of both the franchisor and franchise owner. By thoroughly reviewing these documents and working collaboratively with all parties, you can ensure a successful transfer and set yourself up for long-term success in your new business.
How to Evaluate a Franchise for Sale
Evaluating franchise opportunities, whether new or resale, requires careful research and thorough due diligence. To ensure that you’ve carefully evaluated a franchise opportunity, complete the follow steps:
- Review financial records from the last 2–3 years.
- Speak with the current owner about why they’re selling.
- Assess customer reviews and market share in the territory.
- Look at growth potential and ways to expand services.
- Talk to the franchisor and ask about support during the transition.
To get an even more detailed evaluation checklist, visit our Franchise Ownership Guide. This guide walks you through the evaluation process step by step.
Is Buying an Existing Franchise Right for You?
While no one route to business ownership is perfect for everyone, if you’re someone who prefers taking the fast-track, buying a franchise for sale might be exactly what you’re looking for. That’s because instead of starting from scratch, you step into a functioning business operation with customers, employees, and most likely revenue already in place. It’s also ideal for entrepreneurs who value a proven model and want to minimize risk. And when you’re backed by a brand like Neighborly, you get more than a business: you get a community.
In sum, buying an existing franchise offers a unique balance of independence and structure. It’s a great way to become your own boss while benefiting from the support of an established brand. For entrepreneurs looking for this balance, it might be your best path toward long-term success and ongoing financial growth. But before making your decision, consider reaching out to other franchise owners to learn from their experiences and gain valuable insights into the franchise system.
Take the Fast Track to Franchise Success with Neighborly
If you’re ready to explore Neighborly franchise opportunities, whether brand new opportunity or a business that is already established, we’re here to help!
Want a step-by-step guide? Download our Franchise Ownership Guide today to explore everything you need to know about becoming a business owner through franchising.
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