What is better will depend on your objectives and your skills. For some, starting from scratch may be better because they enjoy the buzz of building something completely new. For others, taking over an existing business will be just the challenge they need. If you are looking at options and considering whether to buy a resale or not, consider the following:
- Location – How important is location to you? Are you prepared to relocate? How far are you prepared to commute? Does this fit in with the particular franchise sector you have chosen? The more established the brand the less choice you will have when it comes to immediately available territories. If that is the case, it will be particularly important to ensure that the franchisor is aware of your preference for location but also that you keep the franchisor updated in case your circumstances change.
- Timescales – Are you looking to invest immediately or the next 12 months or are you flexible? Regardless of the sector and the brand, when you buy a franchise, you will need to complete an initial training course. Most franchisors have set times when they run such training courses, but some may be more flexible than others. Regardless of whether you are buying a cold start or an existing franchised business, you will need to take the franchisor’s training schedule into account, but this is particularly important to consider in a resale situation. When considering timescales, you need to consider not only your time, the franchisor’s and the bank’s, but if you are looking at purchasing an existing business you will also need to consider the seller, your solicitor, their solicitor, your accountant, their accountant, if there is a property involved then potentially the landlord and any other third party who may be involved.
- Due diligence – When buying a resale, there will be additional due diligence that you will need to do including financial, legal and operational due diligence. You will therefore need to allow for time, resource and the cost of such due diligence.
- Skills – Starting from scratch allows you to learn the business as you go along, recruit your own team and grown together. In a resale, you are walking into a business you are nor familiar with, in an industry you may be not familiar with and an existing team with whom you have no history.
- Investment – Although on average buying a resale is likely to be more expensive this is not always the case, and it is important to consider the exact breakdown of what the costs and expenses look like.
