Looking for Cheap Franchises For Sale?
What you need to know before buying a cheap franchise
People are always looking for a good deal, and franchise buyers are no exception. Fortunately, for these bargain hunting franchise buyers, there are plenty of cheap franchises for sale that present great investment opportunities. Yet, there are also cheap franchises for sale that may not provide the business opportunity a buyer is hoping for. So, how do you discern which cheap franchises for sale are worth buying? Here are 4 things you should know before buying a cheap franchise for sale:
1. Understand the difference between “cheap franchises” and “value franchises”. In other words, you want to know why the franchise is for sale. In some ways, investing in a franchise business can be like investing in a house. You can buy a cheap house, but it’s probably going to have some problems you need to deal with. Some of those problems can be fixed without too much trouble like a new water heater, new carpet, or new paint. Other problems cannot be easily fixed, like excessive mold, a crumbling foundation, or significant termite damage. You don’t want to buy a cheap franchise if there is irreparable damage, even if it is cheap.
However, a value franchise for sale may be one that has a reliable brand with a good reputation, but the particular operation for sale has struggled for some reason, often due to limitations of the owner. Perhaps the current franchise owner has challenging personal issues such as divorce or poor health that are limiting their ability to properly operate the franchise. Or, maybe the owner is simply not a good fit for the franchise as certainly not everyone is cut out to run a business. While these situations are unfortunate, they do happen. The right buyer can fix these issues, help the franchise operation reach its full potential, and profit from it.
2. What do other franchise owners in the franchise system say? The more franchise owners in the franchise system you can talk to, the better. However, you don’t need to learn how to run the franchise in these conversations as that will happen later. Knowing their satisfaction with the franchise brand is more critical at this stage. Ask if they would buy this franchise again if they had to do it over again. Ask if they are achieving consistent growth and profitability as well as support. Ask what they like most and least about their franchise.
If more than a third of the franchise owners you talk to are unhappy, unprofitable, and wouldn’t buy the franchise again, then there are likely issues that you aren’t going to be able to overcome. However, running a franchise IS hard work; most days are not a leisurely walk in the park. A few franchisees sounding a little discouraged or frustrated doesn’t mean they are failing or that the franchise brand is not excellent. No good business goes without hardship. By asking the right questions, you can understand if there are systemic issues you should avoid altogether or if there are localized issues you can overcome.
3. Look for awards and accolades received by the franchise brand. Franchise brands that have received awards such as an Entrepreneur Franchise 500 Ranking, a Global Franchise Award, or recognition as a Franchise Flippers Featured Brand deserve some extra consideration. While receiving such recognition does not guarantee success, and there are many rising stars that are on the cusp of such recognition, it does help identify some of the more reliable franchise brands. This is especially true if the brand is recognized year after year. Finding such awards for any franchise brand that has received them is usually easy to do simply by visiting their website.
4. Know your own core competencies and if they apply. It is essential to understand what role, or roles, you must fill as the franchise owner, and if they fit your experience and skill set. This may sound obvious at first, but the excitement of buying a great franchise resale at a bargain price can easily cause franchise buyers to glaze over the reality of what running the franchise will require.
Thoroughly interview the seller and understand what they do each day. Shadow them for a day or two, if possible. Ask other franchise owners about their role and daily responsibilities. Know what the franchisor requires or expects from you as the franchisee. There may be some degree of flexibility as to how the franchise owner is involved, but be sure there is a role that you will enjoy and excel in. There’s nothing worse than buying a cheap franchise for sale, only to find out you don’t enjoy the work.
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