Business Opportunities Weblog

September 22, 2004 by Dane Carlson | 0 Comments

Startup Journal:

While most franchisees open up new units, a few, like Ms. Amin, for personal or economic reasons, find buying an existing franchise the better choice. FRANdata, an Arlington, Va.-based research firm, reports that 3.6%, or 11,800 of the 330,000 franchised units operating in 2002 in the U.S., were transferred to new owners.

Jeff Bevis, vice president of franchise development for Comfort Keepers, a senior-care franchise in Dayton, Ohio, says franchisees usually sell their units because of life changes — health reasons, divorce or retirement — “or because someone got into a franchise and it wasn’t what they thought it would be.”

Franchisers generally let their franchisees determine the selling price of their units, says Rupert Barkoff, a franchise attorney with Kilpatrick Stockton LLP in Atlanta. But they insist on vetting potential buyers just as rigorously as they do new franchisees. At Comfort Keepers, franchisees must inform their franchiser of their intentions to sell and must send potential buyers to a “Discovery Day” introductory program or other event at franchise headquarters.

Expect to pay a premium for an existing business, says Mr. Barkoff. To determine if the price is fair, call at least five other franchisees in similar markets and ask what they’d sell their units for. You can also seek advice from a local business broker who knows what other businesses have sold for in your market.

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