Should I buy a new (Greenfield) franchise and start from scratch, or buy an existing franchise that is already established?

Often this is a question of your tolerance for risk, confidence in yourself and the franchise system, and of course, price.

In an ideal world all new franchises would cost less than existing franchises and all franchise owners would be successful.

The reality is that commercial opportunities emerge because the big variable is people.

Ask the franchisor which existing franchises or company owned locations are for sale, and compare these prices with the costs of opening and establishing a new franchise.

In any large network there will be a few franchises for sale that can be bought for less than the cost of establishing a new franchise. These may be “renovator specials” (poor operators in good locations) just waiting for the right franchisee to operate the business properly. Alternatively the location or demographic may be poor and a good operator is selling out or trading up because the locality has little potential for growth.

Often paying top price for a great profit history will add to your debt burden and assumes that you can operate the business as well as the vendor franchisee, so determine how much of the profit is attributed to a good operator and how much is contributed by the location.

Cheap franchises may offer great value and paying top dollar may diminish risk, but consider where you want to operate your franchise. The new location may better suit your needs.