What is a franchise resale?

Resale is a term used in the franchising sector which refers to an established franchise which is being sold on.

Resales are a natural part of the business cycle of any mature franchise network. Franchisees come to a point in their journey where they may wish to retire, start a new business venture, or realise their investment.

When looking for a franchise opportunity, many people look for a start-up opportunity and may not be aware of the advantages presented by a resale.  Resales can often be a better choice offering the incoming franchisee the chance to buy into a proven and successful business with an established reputation, customer base, employees, and stable revenue.

Resales can often also provide the opportunity to snap up a franchise in a popular area where no new territories are currently available.  They bring enthusiastic new faces into a franchise network, who are invested in the business and will help achieve further growth for the brand.

What will a resale cost?

Franchise resales require a larger initial investment than start-up franchises.

A franchise resale is valued on a multiple of the operating profit of the company, representative of the success and turnover of the business. You’re investing in the business which the previous owners have dedicated years of their life to establishing and building, helping it to become profitable and successful.

Many banks look favourably on the franchise sector, due to the very high percentage of successful businesses. Resales also have a track record in the form of a proven profitable turnover, an existing team, and an established client base, meaning banks will look favourably on any lending, even at a higher level and sometimes over a longer franchise term.

Resales also come with a franchise fee and ongoing royalty fees as they access the same level of franchise support from the franchisor as start-up franchisees.