Acquiring a Franchise Business

investor profile

April 13, 2023

by an investor from Babson College in Boston, MA, USA

Franchise operations can be a great, but often neglected, opportunity for ETA (Entrepreneurship through Acquisition) searchers. I had the good fortune to recently collaborate with ^redacted‌ and ^redacted‌ to document the pluses and minuses of this path and to shine a light on examples that have been successful.


Exploring Franchisees as a Post-MBA Entrepreneurial Path (Wasserstein, Mistretta and Sharpe)


Buying a Franchisee Blog Post by ^redacted‌

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Reply by a searcher
from University at Buffalo, State University of New York in Buffalo, NY, USA
^redacted‌ We have looked in depth at acquiring multiple franchises. Here are a couple of benefits and drawbacks based on our experience. One advantage is that a franchise is an established brand that is already recognized by customers. This can help you attract and keep customers. Franchises also have a proven operating system that has been tested and improved over time, which can make it easier to run the business and achieve success more quickly. Franchisors usually provide training and support to franchisees, and they help with marketing. However, acquiring a franchise requires a large initial investment (transfer fees), and you have to follow the franchisor's rules and procedures, which can limit your flexibility.

One advantage of acquiring a franchise is that franchises could have higher resale value than non-franchise businesses. This is because franchises might an established brand recognition and operating system, which can make them more attractive to potential buyers. Franchisors may offer assistance with the resale process, which can make it easier to sell the business. We, however, ended up not acquiring a franchise due to its restrictions and royalty component. There is certainly money to be made and, for the right buyer, a great option!
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Reply by a searcher
from University of Illinois at Urbana in Dallas, TX, USA
^redacted‌ Thanks for the mention. I started my self-funded search looking for a traditional SMB and ended up signing an area development agreement to open up multiple Meineke Car Care franchise locations in the San Antonio area. ^redacted‌ 's blog posts about franchise opportunities were very informative and helpful to my decision to pursue the franchise route. I agree that many ETA searchers overlook franchise opportunities. Most of the Meineke locations I open will be the result of buying independent auto repair shops from owners looking to retire and converting them to a Meineke. I am happy to answer anyone's questions about my experience or franchising in general.
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