How to buy an existing franchise: 3 key costs

By Admin | 21 Mar 2019 View comments

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.

 

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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.

Still deciding which business is right for you? Check out some brands here.