Franchise Resales: 10 Myths Every UK Buyer Should Clarify First

Buying an existing franchise can be an appealing route into business ownership, offering a proven model, an established customer base and immediate trading activity. However, franchise resales are often surrounded by misleading ideas that can confuse buyers.

This guide breaks down 10 common beliefs to help you understand what is true, what is false and what sits somewhere in between, so you can approach your franchise purchase with clarity and confidence.

1. Taking over a franchise is the same as buying a regular business

False

A franchise resale involves three parties: the seller, the buyer and the franchisor. The franchisor must approve the new owner in line with the franchise agreement. Without this approval, the transfer cannot be completed.

2. Buying an existing franchise is less risky than launching a new one

True

The buyer benefits from an existing activity, an established customer base and a location that already works commercially. However, there is no such thing as zero risk. Success also depends on the strength of the network and the capabilities of the new franchisee.

3. A franchise resale is more expensive than creating a new unit

True

The extra cost comes from the value of the business, its assets, and the work already carried out by the outgoing franchisee. In return, the buyer gains immediate turnover and often a faster return on investment.

4. A franchisee can sell the business to anyone they choose

False

Franchise contracts are based on personal suitability. The franchisor must approve the new buyer. If the profile does not match the network’s standards, the franchisor is entitled to refuse the transaction.

5. The franchisor can block the sale whenever they want

Both true and false

The franchisor has the right to review and accept or refuse candidates. However, most franchise agreements prevent the franchisor from rejecting candidates indefinitely. There are usually limits on how many refusals can be issued.

6. The franchisor can buy back the franchise unit

True

Through a right of first refusal, the franchisor can purchase the business at the same price offered by an external buyer. This allows the franchisor to convert the unit into a company-owned location or prevent the branch from closing.

7. The initial franchise fee can be resold to the next owner

False

The initial fee is not transferable. The new franchisee must pay their own franchise fee as part of joining the network.

8. The buyer signs a new franchise agreement

True

Each new franchisee must sign their own contract, since the relationship between franchisor and franchisee is personal. This ensures that the new owner fully commits to the obligations and standards of the network.

9. The new owner benefits from the same support as the previous franchisee

True

Once approved, the new franchisee receives the same training, assistance and access to the brand name as any other member of the network.

10. The goodwill, customer base and lease belong to the franchisee

True

In most cases, the goodwill, the customers and the commercial lease belong to the franchisee, unless the franchise agreement states otherwise.

Key points to remember

Buying an existing franchise allows you to start trading quickly, but it is essential to understand the legal and financial implications before committing. The buyer should carefully analyse the unit’s profitability, the condition of the business, the terms of the lease and the overall strength of the franchise network. Thorough due diligence is crucial for a secure and successful takeover.