Buying a Franchise

I’m sure some Franchisors throughout Perth (and the rest of Australia) will disagree with me BUT I advise everyone to think very carefully before buying a new franchise (existing franchises are often very good).

Why?
New franchises are often very expensive and you are not paying for an established business with ongoing sustainable net profits. Instead you are paying for expensive equipment, expensive shop fitouts, stock that you have no idea of whether it is saleable or not and then expensive training fees and a franchise fee. You’re buying a promise of future profits with zero track record of that business in that location.

When the franchise is a relatively new concept, you have very little evidence that the Franchisor will indeed provide you with the ongoing level of assistance and marketing support that they promise.

A new franchise can not normally be sold for at least 3-5 years, as that’s the time it will take you to build up profits to a level that a buyer would require to justify their investment in your business. Remember, the MOST IMPORTANT thing that a buyer of your business is looking for is PROFIT, not a cute brand image or expensive equipment. Until your business generates regular sustainable profits, it is almost impossible to sell.

Established franchise outlets  are a far safer investment, because as with any established business, you have proven profits and an established customer base to deliver you a return on investment from day 1. You’ll be able to compare the existing franchise with other non-franchise business, evaluating the return on investment you can achieve with all of those businesses – because you are ultimately buying PROFIT. Fo many business buyers, especially first time business owners, an existing franchise is an ideal choice, because the franchisor often provides you with proven marketing and advertising tools and other systems and procedures.

If you’re considering whether of not to buy a franchise in Rockingham or Kwinana, contact Martin Dabb  on 0458 290 100 or email me and I’ll review the business for you and help you to compare it with other businesses that are for sale.

About Author: Author

Leave a Reply

Your email address will not be published. Required fields are marked *