Buy a Business with Franchising

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Buy a Business with Franchising

Updated on 11/03/19

If you want to start your own business, franchising can be an efficient alternative to going it alone and launching an independent company. Franchising offers all the benefits of self-employment, including a high level of control and a good work-life balance, without the uncertainty of starting up a business from scratch. A franchise agreement provides investors with the ability to work under a recognisable brand and benefit from an established customer base, thus limiting risk. Whats more, a business model will already have been established, saving franchisees time when it comes to selecting business-related elements such as products, equipment and store design. Franchisees can jump straight into a business model that they know is successful.

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How to Buy a Business

1. Become a franchising whiz

Before looking at specific franchises, you should spend some time getting to grips with the world of franchising. There is no one set franchise model, and franchises vary in the terms of its agreement and what it has to offer franchisees. Industry-specific jargon could also be confusing for newcomers to the franchise system. For any technical terms you havent heard before, have a look at Point Franchises glossary that details common confusing terms you are likely to encounter during the franchising process.

2. Do your research

Once youve familiarised yourself with the franchising system, you will be better equipped to carry out research into the types of businesses you would like to work with. Comparison websites are a useful tool to quickly get a sense of the market. These list available franchises by industry, price range and region. For more personalised support, a franchise consultant can guide you through the available options. However, not all franchises will be recruiting new franchisees at the time you are looking. It is important to find out whether businesses you are interested in are on the lookout for new business partners, or are likely to be, in the near future.

3. Narrow down your options

Think about your own limitations when selecting your franchise. Set a maximum budget and stick to it, remembering that many franchises have additional franchise fees on top of the total investment amount. You could also bear in mind your preferred working arrangements would you rather work on-site or from home, and in a part-time or full-time role?

4. Work to your strengths

Considering your own personality and experience is paramount when selecting a business venture, and ignoring these things in order to start a business that you think might be lucrative is likely to lead to trouble. Investors should take time to identify their personal and professional strengths and look into franchises which have scope to exercise them. While a genuine interest in the industry is not necessarily vital, the business is more likely to flourish if its franchisee enjoys their work. Franchisees could also conduct some research into whether their personal values align with those of the company.

5. Get expert business advice

It is impossible to possess all the knowledge and skills needed to launch a successful franchise alone, and an entrepreneur is only ever as good as the advice they receive. It is therefore beneficial to surround yourself with knowledgeable businesspeople who can support you when you need it. For example, franchises are complex structures and there are many legal and financial processes that need to be taken care of when setting one up.

6. Establish contact with your future franchisor

Having selected a franchise, you should get in touch with the franchisor and discuss the process. You should take the opportunity to get to know them, as you must be able to work closely with them if your franchise is to succeed. You dont need to become their best friend, but make sure that you will feel comfortable talking openly and honestly with them in the future.

7. Look to existing franchisees for advice

While your franchisor is there to support you, you may receive a fuller picture of the franchise process within the business by talking to existing franchisees. They can give you an idea of what you can expect and corroborate the franchisors claims. On the other hand, they can also let you know if the franchisor has exaggerated certain facts and figures, or the amount of support provided. For this reason, seeking out other franchisees is an invaluable learning tool.

8. Compile your business plan

Every franchisee must prepare a business plan before they can sign the franchise agreement. This details the strategy for the first few years of the business and establishes targets to work towards. The business plan must be completed in order to finalise the finance application process. Your franchisor should work with you to create your business plan and is someone you can turn to for support with any aspects you dont fully understand.

9. Read the franchise agreement inside-out

The franchise agreement is an official document and once youve signed it, youre legally required to adhere to it. Before signing, you should ensure that you approach your franchisor with any questions you have until you understand and agree with the entire agreement. If the franchisor is vague, reluctant to provide answers or deliberately tries to hide something, you should walk away.

10. Apply for finance

Most franchisees will need to apply for funding in order to start up their business. Many lenders offer up to 70 percent of the required sum, but this depends on your financial history, business plan and suitability as a franchisee. Many franchises will have a portfolio of approved partners, but you could also approach another major lender for the loan. Either way, your franchisor is there to guide you through the funding process.


Opening up your own franchised unit is a huge undertaking, and while franchising eliminates some of the hassle involved in starting a business from scratch, it still requires a large amount of research. Be shrewd and make sure that you can independently verify every claim your franchisor makes. With thorough research, you wont encounter any nasty surprises further down the line and will be well on the way to operating a successful business.

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