Franchising
Buying a Business or a Franchise is a Big Decision
Buying a business or a franchise is a big decision. There are many options to choose from within a wide range of industries. Your choices can include an established independent business, an existing franchise, or a brand new franchise to be the first in your local area. Either way, there are many factors to consider and you need to understand the pros and cons of each type of business.
Whether you have your eye on a popular franchise concept or are considering franchising an independently established small business, you want it to be successful and you want to reduce any risk. After all, if you are potentially committing your life savings, you want to buy a business that not only meets your financial goals, but also suits your skills, experience and personal lifestyle.
This is an important concept to remember when looking for the right opportunities in your area. BuyOrSellBusiness.com can help you find the right business that will allow you to thrive.

Option 1: Buying an Independent Business
PROS
Autonomy in decision-making
Predictable costs (i.e. no ongoing fees to a corporation)
No royalty fees due
CONS
No economies of scale for supplies and services
Limited brand recognition for smaller operations
No corporate leadership knowhow to reach out to for operational support
Option 2: Opening a New Franchise
If you choose to open a new franchise location, it is likely that the business concept has already been time-tested and proven. Depending on the franchise, in some cases the concept has been proven many times over. Perhaps it has been proven thousands of times over with thousands of locations, if there are many units in operation.
In other cases, you may get in on the ground floor where the concept is relatively new; you may even get a discount on your franchising fee in exchange for pioneering a new franchise concept. However, you are taking on more risk, given that the concept has a shorter history and limited track record.
Though you are opening a franchise, it’s important to know that you are still involved in a somewhat new undertaking. Other franchise units may be successful, but with new factors like a new owner, management team and perhaps location there is always the potential for problems and even business failure.
When you are considering buying into a major corporate franchise, consider the pros and cons of owning your own franchise model business.
PROS
A proven business model that has been refined over several iterations (especially for popular, widespread franchises)
Brand recognition
Improved economies of scale for supplies and services
Corporate support and backing
CONS
Costly franchise fees and initial investment
Ongoing royalty fees
Limited autonomy to make certain business decisions
No freedom to change products or services
Risks associated with new location, owner and management team
Option 3: Buying an Existing Franchise
With this option, you could have the best of both the franchise and existing (independent) business world. You’ll get the benefit of not having to go through the growing pains of starting new, plus access to a corporate support system that can help you if you run into issues operating your newly acquired franchise unit.
Additionally, taking over an existing franchise may give you some negotiating options with the existing owner. If they’ve fulfilled all the obligations of their agreement contractually and financially with their franchisor, there may be flexibility to negotiate terms like owner-financing, down payment, etc. in a way that maximizes your initial investment.
PROS
Established customer base
Existing cash flows
Proven track record for a franchise concept
Corporate support system
CONS
Potential to inherit franchise problems or “bad-standing” status with franchisor
Buyers responsible for franchise transfer fee
Recurring royalty fees
Limited autonomy to make certain business decisions
Buying a franchise doesn’t guarantee success, but it’s not a bad option to consider, especially if you are open to buying an existing franchise from an owner who’s already made headway in establishing the franchise concept in its current location.
There are numerous options when it comes to buying a business. Let a BuyOrSellBusiness.com agent help you sift through all of your options and find the perfect fit for you, your needs and your desires. Our agents want both the buyer and the seller to have a positive experience during the entire course of the transaction. Find an exciting opportunity with our help today.