Quick guide to buy your franchise business

When you consider your alternatives sources to generate the income you require, buying an existing business that has a proven history of creating profits and cash flow is generally less risky than starting a new one from scratch. If the business you buy is a franchise, you will receive further benefits that comes from belonging to a proven and recognised brand, applying a tested marketing system and receiving strong training and support to maximise your chances of success.

Your lifestyle and budget

Before you start to look for the business you will buy, start by working out what criteria the business should meet, such as: What minimum amount of income the business has to generate to meet your family’s needs; as well as what type of lifestyle you want the business to provide. Based on criteria like these, then create a shortlist of business that will fit in.

Meet specialist business brokers

Start by having a conversation with specialist franchise business brokers based in your local area. Ask them about the market in general, the different franchise systems and brands, and if they have listed any business opportunity that will suit what you are looking for. Your broker will be able to provide a detailed business profile for each business they have available for sale, and you should take the opportunity to ask them specific questions. At the same time, you should do your own independent research and assessment of the business, and gather as much information as possible.

Have a conversation with your accountant

Provide the business profiles of the potential businesses you shortlisted for purchase to your accountant, ask them to advise on their financial strength and profitability, and provide their recommendation. Meet with them and discuss at length so you can understand as much as possible about the businesses, determine a fair price to offer and what you can expect in terms of return on your investment if you bought them.

Negotiate the purchase

Once you have found the franchise business you wish to buy, the next step is to determine a price you are prepared to pay and communicate your offer to your franchise broker. They will advise the vendor of your interest and get you feedback on whether they accept your proposal or otherwise they will make you a counteroffer. Normally there is a process of bargaining between both parties until agreement is reached and a formal offer is signed off.

Sign a contract

A contract is prepared for signature immediately after an offer has been agreed, and both parties will sign under certain conditions to proceed. It is important at this stage that you involved your solicitor to advise on legal aspects of the transaction.

Secure the finance

Use a professional finance broker that specialises in franchise lending to help you go smoothly through the application process. We will find the best deals and lender for you and will manage your application with the bank all the way through approval to settlement. Approaching your local bank directly about franchise finance can often result in an unnecessary rejection and waste of time.

Apply to become a franchisee

Before you can take control of your business, you will need to apply with the franchisor to become one of their franchisees. As franchises already have an established brand and reputation, you need to prove the franchisor that you are a suitable candidate to operate and represent their brand.  As part of the application process, you will be required to prepare a business plan and to demonstrate how you will successfully operate the business and provide outstanding customer service.

Get ready to take over the business

Once your franchise application has been approved, you will need to go through the training program offered by the franchisor, which will prepare you to take over the business and hit the ground running shortly after settlement.

Finally, Settlement, and champagne!

When all the boxes have been ticked off, a settlement date will be set when solicitors will exchange documents and money. Once this is completed, you will immediately get the keys to your franchise.

At MoneyQuest Teneriffe we are experts in franchise lending, business finance, commercial Property, SMSF loans, car and equipment finance. We also specialise in residential property loans to purchase or refinance your home or investment property.

Call us on 0417 551 445 for a no obligation appointment to discuss your specific requirements.

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Disclaimer:

This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the article is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).

Please consult your financial advisor, solicitor or accountant before acting on information contained in this publication.