When people think about buying a franchise, they often picture launching something brand new, signing an agreement, cutting the ribbon, and welcoming that very first customer. But there’s another option that can be equally exciting buying a franchise resale.

A franchise resale happens when an existing franchise owner decides to sell their business. You’re essentially buying a location that’s already established, with customers, staff, and local name recognition. It’s a bit like buying a house that’s move-in ready instead of building one from scratch.

That said, while resales can offer some great advantages, they also come with unique risks and considerations that every buyer should understand before moving forward. Let’s explore both sides.

Why Franchise Resales Appeal to Buyers

There are plenty of good reasons people look at franchise resales:

• Immediate cash flow: Unlike a new location, a resale is already generating revenue.
• Trained team in place: You’re inheriting employees who know the systems and customers.
• Established reputation: The business is already known in the community.
• Easier financing: Lenders often view resales as lower-risk since there’s financial history to review.
• Faster ramp-up: You can step into ownership without waiting months for a new build-out or marketing launch.

For many people, it feels like a “head start” into business ownership. But as with any investment, what looks good on the surface deserves a deeper look.

The Risks and Realities of Buying a Resale

While franchise resales can be attractive, they’re not automatically the safer or cheaper option. Here are some important realities to keep in mind:

1. Past performance doesn’t guarantee future performance

The current owner’s financials give helpful insight into the business, but those numbers don’t automatically translate to your experience. You’ll have your own debt service (loan payments or financing costs), and your management approach or staffing structure might look different. Even if the business has been profitable, you’ll need to evaluate whether those profits remain realistic once you factor in your costs.

2. Customer loyalty may not transfer

In industries that rely heavily on personal trust (like senior care, child care, or pet care) customers often have strong relationships with the existing owner. A change in leadership or communication style can lead to some churn. Part of your due diligence should include assessing how much of the business’s success depends on the personal rapport of the selling owner.

3. Reputation and reviews matter… and can be hard to change

If the resale opportunity has poor online reviews or a damaged reputation, turning that around can take time, energy, and marketing dollars. You might find yourself investing heavily in rebranding or community outreach just to reintroduce the business under new ownership.

4. You may inherit problems you didn’t create

Sometimes a resale is available because the owner didn’t invest enough time, money, or energy into the business. If that’s the case, you may need to make the same foundational investments (marketing, staffing, or operational upgrades) that you’d have to make if you started a brand-new franchise. In some cases, it might even be more cost-effective to open new rather than fix what’s broken.

5. Limited room for growth

If the business has already reached maturity or saturated its local market, you may find that there’s less room for expansion compared to a new territory. Be realistic about what “growth” looks like for that particular location.

What to Evaluate During Your Research

When you’re exploring a franchise resale, take your time to review both the business and the bigger picture. Here are some key areas to focus on:

1. Financial performance – Look at multiple years of profit and loss statements, balance sheets, and tax returns. Evaluate how the numbers might change once you factor in your financing, your salary expectations, and your operating style.
2. Franchise Agreement – Determine whether you’ll be signing a new agreement (with updated fees or terms) or assuming the seller’s existing one.
3. Franchisor approval and support – You’ll still need to go through the franchisor’s approval process, so make sure you meet their criteria and understand any training or transition support they’ll provide.
4. Local market conditions – Consider whether the area still offers growth potential. Has competition increased? Is the brand still well-positioned in that market? Ask the franchisor if other existing owners were offered first right of refusal to buy the business before it was made available to the public. If so, ask why other owners within their system turned down the opportunity to expand their businesses through acquisition.
5. Reputation check – Read customer reviews, talk to neighboring business owners, and ask the franchisor for insights about the territory’s performance compared to others.
6. Transition plan – Ask what kind of support the current owner is willing to provide during handoff. A smooth transition can make a big difference in retaining staff and customers.

How a Franchise Consultant Can Help

Evaluating a franchise resale is more nuanced than starting new, but you don’t have to do it alone. A franchise consultant can help you:

• Identify quality resale opportunities that align with your goals and investment level.
• Review the pros and cons of each option with an objective perspective.
• Connect you with lenders familiar with franchise resales.
• Guide you through your due diligence and help you prepare the right questions to ask both the franchisor and the seller.

The Takeaway

Buying a franchise resale can be a great opportunity for the right buyer, offering a head start, an established customer base, and an existing operational structure. But it also requires a careful look under the hood.

Understanding the full picture including potential risks, reputation challenges, and financial realities will help you make a decision that fits your goals and sets you up for success.

If you’d like to explore franchise resale opportunities or talk through what to look for in a potential purchase, I’d be happy to help you navigate the process and find a fit that makes sense for you. Book some time with me here.