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5 Questions when Considering
Buying an Existing Franchise.

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• 0. Selling your Business during the COVID-19 Crisis.  
 
• 1. Should I sell my business ?   Take this Quiz ....
 
• 2. Get Ready to Sell Your Business.  
 
• 3. 3 Key Considerations to Create an Effective Business-for-Sale Ad.  
 
• 4. The importance of photos in effective advertising.  
 
• 5. The Ad Title that Sells the Business.  
 
• 6. How to Choose Effective Categories for your Listing.  
 
• 7. Selling your business: ASSET sale or SHARE sale ?  
 
• 8. Some Hints for you When Selling your Business.  
 
• 9. How to Respond to Buyer Inquiries .  
 
• 10. Qualifying Buyers: Separating the sharks from the keepers.  
 
• 11. Ten things I should know when negotiating !  
 
• 12. Will I Get Top Dollar When I Sell My Business ?  
 
• 13. Prepare your Business for your Ultimate Customer.  
 
• 14. Is Your Business a Pain, or a Pleasure ?  
 
• 15. What Drives Owners to Sell & Buyers to Buy ?  
 
• 16. Frequently Asked Questions - by Jim Clark  
 
• 17. An Overview of the Business Selling Process.  
 
• 18. Recasting - a key to building value to the seller.  
 
• 19. What the Profit & Loss Statement Doesn't Tell You.  
 
• 20. How Do Buyers Determine Value when Considering a Business Purchase ?  
 
• 21. Why does Confidentiality Matter when Buying or Selling a Business ?  
 
• 22. Should You Buy an Existing Franchise?  5 Questions to Ask  
 
• 23. Succession Planning is central to selling success  
 

 
 DISCLAIMER 
 
These articles are for general information purposes only and do not constitute legal, accounting or other professional advice.  Important financial and legal decisions should be made only after seeking appropriate professional advice based on your specific situation.
 Should You Buy an Existing Franchise?
  5 Questions to Ask.

Whether it’s starting a moving company or a new tech company, being a business owner is a dream many people have.  However, some struggle with the thought of starting a business from scratch.  After all, most new businesses fail during their first few years of operation.  That is why buying a business or franchise may be the best option to achieve the dream of being a successful business owner.  There are many advantages for those interested in buying an established franchise, but make sure you ask the following questions before you take the plunge.

 
1. Is buying a franchise the right decision?

This should be the first question that comes to your mind if you're looking at buying a franchise.  A franchise is a great way for new business owners to develop the necessary skills they need to be successful in business.  Most franchisors have ongoing support and training so you're not totally alone in your business venture.  However, it's not for everybody.  Certain rules have to be followed so you generally won’t have the freedom to introduce new products/services or market a certain way.  However, you will get a establish brand name and a model that if followed will, in most cases, bring you a lot of success.  Consider your objective and goals.  Ask yourself why you want to own a business and make sure the franchise will deliver on your expectations.
 

2. What do other franchisees have to say?

Talking with other franchisees is the best way to understand what being a owner would really entail.  The franchisor may give you a list of references you could contact, but it wouldn't hurt to reach out to others not on the list.  Veteran owners will know all the ins and outs, ups and downs of owning the franchise and be able to help you decide if this is really for you and if the franchisor is good to work with.
 

3. Is the franchisor in good public standing?

As a potential franchisee, you should perform the necessary due diligence and investigate thoroughly the franchisor’s history and financial standing.  Be aware of any litigation history, bankruptcy, and general market conditions.  You should also obtain a Uniform Franchise Offering Circular (UFOC), which will disclose most of this information for you.
 

4. Why is the owner getting out?

This question may be disclosed during the selling process, however it may not be the real reason as to why the seller is selling.  Although it can be a private, you should try to get some information on why the owner is selling the business.  It could be a personal, financial reason, or maybe it just wasn't a good fit.
 

5. Should I use a accountant, lawyer or business broker?

A good business broker is a must.  An accountant and lawyer are good, just as long as they understand their role in the process.  There is a lot of technical jargon when buying a business.  A good business broker will work as a guide in obtaining this information and helping you understand all the risks and benefits.  They understand the process of the business transaction and can help deal with any obstacles that may arise (and they will arise).  The accountant's responsibility is to ensure that the financial statements are correct and contribute in the financial review of the business.  The attorney's primary role is to make review and help the buyer understand any legal documents such as leases, vendor agreements, franchise agreements, employee agreements etc.  The attorney's function is to protect his or her party's interest, but not to the point where the demands overwhelm the other party.
 
There are a variety of franchises to choose from, everything from fast food to junk removal.  Make sure you do your research and if you're unsure, contact an experienced business broker to help guide you through the process.
© 2014 by Kyle McKay.
Kyle is a entrepreneurial enthusiast who has started and operated two successful small businesses.  He enjoys writing about business related subjects and trends.  He currently works with two leading franchises "You Move Me" and "1-800 Got Junk".

 
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