If you want to buy a franchise, purchasing an existing franchise business is worth checking out. Joel Libava, an SBA guest blogger and trademarked as The Franchise King, offers three things you need to know about franchise businesses that are for sale:
1. You won’t find them by searching on Google or Yahoo as most franchise resales aren’t advertised. If you want to find franchises for sale in your area, contact a local business broker who specializes in helping small business owners buy and sell businesses. Contact business attorneys or CPAs in your area, and ask for a referral. Another way to find a local business broker is to go to the International Business Brokers Association (www.IBBA.com) and search their member directory. You can also search websites that focus on businesses and franchises that are for sale: www.GlobalBX.com, www.BizBuySell.com, www.BusinessesForSale.com, NationalFranchiseSales.com.
2. You may not find out the true reason the franchise was for sale until after you buy it.
Most owners report that they are selling because they are ready to retire or poor health is making it hard to keep up with the demands of operating a business. But, what if it really was something else?
3. Financing an existing business can go either way.
Sometimes a business’ financial statements look good enough for a lender to approve a buyer’s loan relatively easily. But when a businesses’ books don’t look so good you’re going to hear: owner financing. Owner financing involves the seller financing a portion of the sale. Beware that there are no rules on loan terms and interest rates. You’ll need to convince the owner that you’re capable of running a profitable business and will have no problem paying back the loan.
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iane Diamond is vice president of media relations for SCORE Southern Arizona, a nonprofit group that offers free small-business counseling and mentoring by appointment at several locations. For information, go to www.southernarizona.score.org, send email to email@example.com or call 505-3636.