If you’re looking to buy a franchise from someone, it’s important to understand the key points of the process. There are various considerations to bear in mind, from the Franchise Disclosure Document (FDD) to value assessment and transfer requirements. In this article, we’ll go through 10 key points to consider when buying an existing franchise business.

Can You Buy a Franchise From Someone?

The short answer is yes, you can buy a franchise from someone. There are two main options when buying a franchise: opening a new franchise location or buying an existing one. When you buy an existing franchise it will come with existing customers, staff, equipment, and brand recognition. This can be a great benefit but also comes with certain risks and considerations.

1. Understand the FDD

Before buying a franchise, make sure you read and understand the Franchise Disclosure Document (FDD). This document is a legal disclosure that outlines the risks and benefits of the franchise. It will provide you with detailed information about the franchise, such as ownership requirements, franchise fees, and franchisee rights.

2. Review Transfer Requirements

When buying an existing franchise, you may need to review and comply with certain transfer requirements. The franchisor may require the buyer to meet certain qualifications and may need to approve the transfer. As the buyer, you should understand the transfer process and the requirements you will need to meet in order to complete the purchase.

3. Determine the Business Value

When buying an existing franchise, it’s important to determine the value of the business. This can be done by looking at the franchise’s financials, such as its cash flow, profits, and assets. It can also be helpful to get an outside opinion from a business broker or accountant.

4. Assume or Sign a New Franchise Agreement

Some franchisors will allow you to assume the seller’s franchise agreement. Others will require you to sign a new franchise agreement identical to the one they have with the seller. It’s important to understand the franchisor’s requirements before committing to a purchase.

5. Negotiate the Purchase Price

With an existing franchise, you can negotiate the purchase price. New franchises come with a set price and terms, on which the franchisor is unlikely to budge. When buying an existing franchise, you may be able to negotiate a lower price or favorable terms.

6. Get the Right to Use the Franchisor’s Brand

Buying a franchise gives you the right to associate with the franchisor’s name or brand. An established franchise with a well-known name — and good reputation — can be extremely valuable. When buying an existing franchise, make sure you understand the rights associated with the franchisor’s brand.

7. Assume or Sign a New Franchise Agreement

Some franchisors will allow you to assume the existing franchise agreement. Others will require you to sign a new franchise agreement based on the franchisor’s standard agreement. It’s important to understand the franchisor’s requirements before committing to a purchase.

8. Know the Exact Purchase Price

When you buy an existing franchise for sale, you’re paying an exact price for the business. There’s no “investment range,” like there is when you buy a new franchise. The purchase price will be based on the business’s value and the seller’s expectations.

9. Evaluate the Factors

When evaluating an existing franchise opportunity, it’s important to consider a variety of factors. They include factors such as industry, location, financing and the ability to grow the business in the future. One other major decision is whether or not to keep the existing staff.

10. Seek Professional Advice

Finally, it’s important to seek professional advice before buying a franchise. A business broker can provide valuable insights into the process, as well as help you evaluate and negotiate a purchase price. They can also provide guidance on the transfer process and help ensure you comply

What is the process of purchasing a franchise from another person?

Here are some tips to help you when considering buying a franchise resale:
1. Make sure you understand the Franchise Disclosure Document.
2. Check out the requirements for transferring ownership.
3. Estimate the worth of the business.
4. Ask the current owner why they are selling.
5. Look over the financial records.
6. Do your research into the seller and franchisor.
7. Analyze the franchisor’s history.
8. Remit the transfer fee.

Is it possible for one person to own a franchise?

A franchise is a business owned and operated by an individual with a licensing agreement from a franchisor. In contrast, a partnership involves two or more people forming and managing a business. The individual responsible for a franchise is required to abide by the terms of the contract.

Is it possible to purchase a franchise?

Rather than starting a business from scratch, a franchisee pays a set fee and royalty to be able to use a franchisor’s established name and system. This can be a great way to start a company, but usually requires a substantial amount of money to do so.

Are you able to assume ownership of a franchise?

Some franchisors will let you take over the existing franchise agreement, while others will require you to sign a new agreement that is similar to the one they offer other franchisees in the system. In some cases, they may allow you to sign a new agreement but only have the remaining term of the old agreement.