This is a question that is often asked and there is no right or wrong answer.
One needs to understand the opportunities and challenges of the new versus existing franchise dilemma before making any decisions. The pros and cons of both scenarios must be evaluated to circumvent any nasty surprises and improve your chances of success in franchising.
Existing Franchise Benefits:
There is belief that buying an existing franchise is easier than launching a new franchise outlet. Depending on the specifics of the outlet, this may or may not be the case but it is true that existing franchises offer several advantages that are worth considering:
- Track Record
An existing franchise opportunity is already operational so the seller should be able to prove a track record of profitability to help you determine current cash flow and make better projections regarding the future performance of the business.
- Customer Base
A massive benefit for a new business owner is an established and loyal customer base. Purchasing and existing franchise makes it even easier for the new owner to benefit from an established customer because the franchise brand gives customers a sense of consistency, even if the business has changed hands.
Potential Franchisees are limited in their ability to negotiate with Franchisors on terms or price as they will have a set fee structure for new franchise locations. Buying an existing franchise, allows you to negotiate the terms with the seller and maximise your return on your investment.
Proven franchises may be a safer investment but this decision ultimately lies with you.
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