Why are we advising this?  Check out our correspondents comments.  And note there have been numerous legal actions in this area recently, including judgements against a major Franchiser for mis-selling Franchises.


Nevertheless if you're able to buy into an existing, stable business that's part of a Franchise, it can be that wonderful first step into business you need.  All the resources in place, all the legalities and insurances accommodated, a sound client base, someone to guide you into your new career and advise you on customer relations.  Our advice here is equally straightforward:


Check the business is not under some external threat, just like you would have a "Search" on local authority plans and developments when buying a house.  And extend this to include business relationships, including the Franchise agreement itself.  Be aware of the existence of things like next generation agreements that can drastically alter financial viability.  Be certain the accounts and projections accommodate all known factors.  Get as full an understanding of the existing client base you can and remember, most of your future trade will come from previous satisfied customers.  How much of the business image will remain once you take over?  Where employed staff are a part of the picture, be sure to sound out how the change will be received - they are a part of the image.  And get whatever trade references you can, including one from the Franchiser giving their full acceptance of the change and binding them to continuance, on the same basis.


As to the buy-in price, an industry rule-of-thumb is a good guide: a half to one & a half whatever the owner makes, (ie take-home pay.)  But of course, you can agree to whatever you wish - nobody can dictate the price in what is effectively a confidential negotiation between two parties.


After all this you may still  find things aren't what you were led to believe, but now you're tied into a pernicious and loveless marriage.  Our advice again is simple - get a divorce.  Check the Franchise Agreement for those exit clauses and exercise them.  If the clauses seem particularly complex, consider airing the details through us; we guarantee a confidential service


 - Just maybe one of our correspondents will have an answer -




Tutor Business services

Home Starting up Franchising Correspondents Advertisements