‘Resale’ is a term used in the franchising sector which refers to an established franchise which is being sold on.
Many individuals looking for a franchise business opportunity are often looking for a start-up, but some may instead consider a resale opportunity. Resales might be a favorable option if they cannot find a new territory in their chosen area, or realize their strengths lie in growing a business and a team.
At the beginning of their journey with Home Instead, franchisees are encouraged to consider the future of their businesses, including their exit strategy. Owners who are looking to sell on their business are provided with a wealth of support, helping them to realize their investment whilst being sure they are handing their business over to someone who shares the Home Instead ethos and mission.
So, what is a resale?
A resale is a franchise territory which is an established business and may have been built up over many years, which is now being sold on.
A franchise resale has an established reputation, customer base, team of employees and a guaranteed revenue.
Why do resales come about?
Resales are part of the business cycle of any mature franchise network. Franchisees come to a point in their journey where they may wish to retire, realize their investment or move onto something different.
Most franchise networks in the UK will have a number of resale territories available at any one time.
Resales bring enthusiastic new faces into a franchise network, who are invested in the brand and will help achieve further growth for the company.
How is a resale valued?
A franchise resale is valued on a multiple of the operating profit of the company, representative of the success and turnover of the business.
You’re investing in the business which the previous owners have given their time to establishing and building, helping it to become profitable and successful. Franchise resales require a larger initial investment than start-up franchises, but financial help is available.
Many banks look favorably on the franchise sector, due to the very high percentage of successful businesses. Resales also have a track record in the form of a proven profitable turnover, an existing team and an established client base, meaning banks will look even more favorably on any lending.
Resales also come with a franchise fee and ongoing royalty fees as they access the same level of franchise support as start-up franchisees.
How does the franchisor fit in?
As a franchise, the business isn’t a standalone company- it is part of a franchise network. The franchisor wants someone to invest in the resale office who will continue to grow the brand, mutually benefitting their franchise network as a whole and the individual.
When owners decide they want to sell their business, the franchisors may become involved to ensure the franchise is sold to someone who aligns with the franchise’s mission and ethos- a good fit who will continue to achieve success. Many franchisors help to advertise and market resales, as well as recruit new owners.
Home Instead, alike many franchisors, are there to guide franchisees from the very first day of their journey until their last and are invested in ensuring their exit from the company is supported.
What are the benefits of a resale as opposed to a start-up franchise?
For people who are looking to step into an established, profitable business, a franchise resale might be a perfect opportunity. You don’t have to deal with any of the initial development of the business, instead accessing an established team, customer base, and revenue from day one.
Resales are perfect for someone who has run a business before and is looking for more of an investment than a hands-on opportunity. You may want to buy a resale in a growing market or sector, and manage a steady, profitable business.
However, if you want to experience the highs and lows of starting your own business, you may be more suited to a start-up franchise.
A resale franchisee ideally needs to be able to engage with and manage people straight away, as the existing team will already be established and have their way of working. They must have a very clear vision, ethos and culture that aligns with the franchise network. With a franchise resale, you get all the positives of buying an established business, with the added benefits of a franchise support package and a well-known name.