The Key Differences Between Buying an Established Franchise vs. a New Franchise

 Buying into a franchise system is a popular option for entrepreneurs interested in owning their own business while still being a part of a larger system. While buying a new franchise is a great chance for a fresh start and comes with a world of possibilities, another successful option is to buy an established franchise. Even though new franchises are backed by the support of the franchisor, it is very similar to starting a brand-new business and comes with its own unique set of challenges such as marketing, staffing, and establishing a client base.

Buying an existing franchise though, gives you the same stability of having the franchisor for support, but less surprises, as the business has already established itself in the community and has loyal patrons. An existing business opportunity comes with the benefit of being able to analyze gross sales, payroll, and other key factors that a new franchise does not.

Some of the key differences between buying an established franchise versus a new franchise include:

Location: With a new franchise, you will have to work with the franchisor to determine what areas you can have your location within the territory. Once you determine the possible areas, you will need to negotiate to lease or buy a building to accommodate the needs of the business. With an existing business opportunity, you are taking over an existing location, eliminating the need to search and negotiate for real estate.

Marketing: Opening a new franchise location involves intense marketing to help get the business off the ground and running quickly. Likely, an established franchise will have existing marketing efforts in place that you continue to benefit from and use.

Staff and Customers: A new franchise location requires recruiting and training a new staff, as well as establishing a customer base. Established franchises and existing business opportunities often come with a seasoned staff and existing customers.

Price: It is a myth, that buying a new franchise is always less expensive than buying an established franchise business. Often, an established franchise’s resale price can be negotiated or comes with other benefits that a new franchise does not. By the time you purchase or lease a new property, hire a staff, order equipment, and pay the franchise fee,; this amount can end up costing more than the price of a franchise resale.

At Franchise Flippers, we are experts at franchise buying and selling, and we would love to help you with your franchise business. Contact us today to learn more about franchise resales!