Buying a business or franchise
The real advantage of buying a business is that most, or all, of the infrastructure, is already in place. Apart from this, buying in a business involves many of the same processes as starting your own.
You will need to develop a business plan, get financing and educate yourself on business practices.
Do some research on the business itself: Look at the financial statements for the last few years, find out the owner’s motives for selling, talk to current employees and suppliers, look at the condition of the building and equipment, etc. Your business agent can help you with your research and your lawyer can help you draft a contract and make an offer.
When you buy a franchise you buy the right to open a branch of a pre-existing business, which you must run using the name and methods of the franchiser.
Franchises tend to be more likely to succeed than start-up businesses because:
- They benefit from the already established name and reputation of the parent company. This helps to inspire the confidence of customers and lending agencies.
- They receive instruction in the parent company’s procedures, technology and products and continuing help with marketing, administration and accounting. They may even be given assistance with start up capital.
Before you decide to purchase a franchise take into account:
- High initial cost of purchasing the franchise package
- Ongoing expense of royalties and contract extension fees
- Penalties for operating outside of the parent company’s stipulations
You should discuss this option with your lawyer and business advisor.