Are you considering if you will buy an existing franchise? The process is a little different than opening a new business.
While it presents the opportunity to jump straight into a profitable venture, there are certain costs you will encounter.
Here are 3 costs involved when you buy an existing franchise:
1. Site price
The first cost is the price you negotiate with the existing vendor
This will be made up of equipment you purchase and an element of goodwill.
2. Goodwill
This is the amount you pay above the value of assets for ‘future maintainable earnings’
Put simply, goodwill is an intangible asset associated with the business
For example; value of a company’s brand name or customer base.
3. Franchising fees
Like all businesses, buying an existing franchise will make you subject to fees. These include franchise fees, training fees, as well as legal and accounting costs.
You may also need to pay for refurbishment.
Purchasing an existing business can help kickstart your operation but it is important to remember that certain costs must be factored in.
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