Positive and Negative to acquiring an established franchise location

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by a searcher from Western Michigan University - Haworth College of Business
in Grand Rapids, MI, USA

1yr ago

Positive and Negative to acquiring an established franchise location

What are the + and (-) to acquiring an established franchise location. Looking at a strategic add, an existing business already under ownership can act as a sales funnel for the acquisition target. Working through full analysis and will post at a future date. Looking for general thoughts that will help me dig deeper in my research.

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reply by a professional 1yr ago
from University of Pennsylvania in Austin, TX, USA

To echo the comments above, be very careful if you're making assumptions about increasing the profitability of the current operation. And I'd advise talking to other franchise owners unaffiliated with the seller to learn more about the franchise relationship (although make sure you respect privacy in the discussions). If you end up going through with it, would love to chat and pick your mind a bit. Just posted about collecting these stories to refine a franchise evaluation product I'm working on.

reply by an intermediary 1yr ago
from United States Naval Academy in Denver, CO, USA

The big one here is how does the franchisor feel about the synergy of what you have and what you want to buy. They could still require you to pay marketing minimums even if you are getting tons of businesses from the business you already own. Look at it as it stands on its own. If you would buy it without the business you currently own, then it's a smart buy. If the only reason you are buying it is because you think it would complement the business you have, you may find the franchise restrictive.