in·ter·view
\�in-tər- vyü \ � noun
1. A Q&A session with an industry expert 2. Holly Ford on buying a resale business
Holly Ford is an award-winning franchise developer and
Q
founder of Zarian Firm, an international business brokerage. As a consultant at The Franchise Consulting Company, she empowers her clients with the tools to unshroud hidden value as well as reveal the potential mine fields of a brand. Contact Holly at Holly@TheFranchiseConsultingCompany.com or 513-828-9810.
What are the pros and cons of buying a resale business?
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When you buy an existing franchise, it’s known as a resale. Generally, you can buy one that is successful and making money, or you can buy one that is in trouble. Either can be an opportunity if you know what you’re getting into.
The Pros 1. You are buying a business that has already invested in the start-up costs—including initial marketing and customer acquisition—so you don’t have to. 2. The organization is established. Systems and procedures are in place. 3. All of the job descriptions, hiring, negotiations, and training of employees are complete. 4. The business is generating revenue, giving you immediate cash-flow. 5. Location has been established and contracted, and all details of the facility design and construction are complete and operational. The Cons 1. If the business isn’t working due to a bad product or service, inattentive customer service, or slow delivery, you can be starting with a less-than-stellar reputation. 2. Systems and procedures may not be working efficiently enough to achieve profitability. 3. ‘Inheriting’ inefficient employees can be problematic, though curable. More concern should be in preparing for an inevitable 10-15 percent attrition rate when purchasing the business. 4. There may be a declining trend in profitability. 5. A lease agreement that is too high for profitability, or a location that does not attract or retain customers is difficult to change.
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