The advantages of owning a franchise outweigh those of starting an independent business. From working with mentors that can provide invaluable advice to having the backing of an established company for training, marketing and operations, it’s difficult to envision a better entrepreneurial path forward than owning a franchise.
Of the many options available to those interested in owning a business, buying an existing franchise is often overlooked.
While you look into investing in a franchise, consider speaking with a franchisee looking to retire from the business. This will give you a better idea of all your alternatives before stepping into the world of entrepreneurship.
Existing Customer Relationships
When you decide to buy an existing franchise, you’re often gaining the pre-established relationships that already exist with current customers. These connections can invaluable. Studies have estimated, for instance, that gaining a new customer costs five times more than retaining a current client. When you buy an existing franchise, you already have a solid customer base intact.
Whether you choose to buy an existing franchise or start a new one, though, it’s important to do your homework. It may seem that some industries, for instance, have a lesser need for customers to return. One example is thought that average people won’t need home inspection services frequently. The fact that WIN Home Inspection works with over 125,000 Realtors®, who return frequently, proves this wrong.
Location, Location, Location
When starting a business or buying a franchise, location is an important consideration. Your decision on where to locate can affect the availability of skilled employees, the amount of foot traffic you receive (if you are opening a store) and a variety of other important factors. When you decide to invest in an existing franchise, you may be one step ahead of business owners starting fresh.
This isn’t to say that you should keep the franchise’s current location. In fact, the owners may be selling their investment in the franchise after learning that they picked an imperfect location. Fortunately, you can figure this out beforehand. Do some research into the surrounding area and look at the company’s profit sheets from recent months.
It’s important to note that some companies focus on location even for new franchisees. At WIN Home Inspection, for instance, your territory will be based on how many real estate agents and transactions exist in a certain locale. In a world where more people are finding professional services online, devoted territories are just as important as a good location.
Established Brand Recognition
One of the biggest benefits of investing in a franchise is the established brand recognition. This is the case with all franchises, but when you buy from an existing owner, the local area has already established a personal relationship with the company.
Consistent brand presentation has been shown to increase revenue by up to 23 percent. This makes your franchise purchase – whether new or already existing – a profitable endeavor if done correctly.
While the reputation in the community the previous owner built can prove beneficial, it’s also important to note that some customers may feel out of place. Even though you’re running the same company, they may be concerned that they won’t receive the same service.
This could potentially put buying a new franchise or an existing one on equal grounding. Even if some customers think service levels won’t remain consistent, though, you can alleviate their concerns through excellent business and personal aptitude.
Vendor Relationships in Place
One of the most overlooked aspects of running a business is vendor relationships. No matter how great your idea is, you’ll need other businesses to make it work. Whether it’s training, certifications, marketing, operations, buying insurance, purchasing inventory or hiring a maintenance professional, vendor relationships can have a significant impact on your success.
When you invest in a strong franchise, you can mitigate those headaches. And with purchasing an existing franchise, you can gain additional insights and experience into how these established relationships add value.
Mentorship and Training from Retiring Franchisees
One of the greatest things of any franchise is the potential for mentorship. If a company promotes collegial relationships between its licensees, it’s giving them an increased chance of success. One need only consider the fact that the 5-year survival rate for most businesses is 50 percent, but 70 percent of companies whose business owners have mentors make it past this mark.
The great thing about buying an existing franchise is that you can also gain mentorship and training from the previous owner. Few will have the level of experience they have in running that particular business within that particular community. Establishing other collegial relationships with existing franchisees is still important, but keeping contact with the previous owner – if they’re willing – could prove invaluable.
Trained Staff in Place
Dependent on your overall goals and needs, you may not find it necessary to have any employees. If you do, however, it can be beneficial to already have them in place. When you buy an existing franchise, the current owner has already gone through the trouble of hiring and onboarding employees. This can save you significant costs and allow you to hit the ground running.
On average, it costs about $3,000 to onboard a new employee. This is because you’ll need to find the right person for the job, train them, put in hours to get them “on the books” and other essential tasks. Even after spending money to hire workers, many companies lose their investment due to turnover. When you come into an existing franchise, your employees may already be mainstays at the company.
Of course, you may prefer to bring on your own staff. Even better, you may be able to cut costs by handling the company yourself. These are all important questions to ask when deciding between a new and preexisting franchise.
Ask the Right Questions When Buying Existing Franchises
The benefits of investing in a franchise far outweigh starting a business on your own from scratch. Further, buying an existing franchise could potentially create even more advantages for you. Take the time to research your options, and you’ll find which works best for you.
Owning your own business can be exciting and fulfilling. Feel free to utilize the experts at WIN Home Inspection as an invaluable resource for you in your journey toward business ownership and a rewarding career. You can speak with one of our professionals today by clicking here. You can also discuss your plans with our specialists by emailing firstname.lastname@example.org.