Franchise resales: rescuing a failing business

Franchise resales: rescuing a failing business

The main advantage of buying a resale franchise is that it will already have an established customer base: you will have an income from day one.  

When buying a resale franchise it is also easier to assess the likely profitability of the enterprise, compared with purchasing a virgin territory. This is because past financial performance can easily be analysed.  

The business can also be benchmarked against other franchisees running similar sized territories to see how well it is doing.

However, what if a quick look at the books reveals that the franchise is underperforming? The key is to consider the real reason why the business is for sale.

Not all franchisees aim to build up a business then sell it when it is doing really well.

If the franchisee is retiring or selling for any number of genuine personal reasons, sufficient enthusiasm or time may not have been devoted to the business as would be ideal.

If this is the case, it could mean you are looking at a potential goldmine! 

Sometimes, an outgoing franchisee who has worked in the business for a long period of timemay have struggled to see the wood for the trees. People tend to spend time on the jobs they like doing and skimp on others.  

Strengths and weaknesses

Play to your strengths and be prepared to delegate jobs that you don’t enjoy or are not good at to someone who will be able to manage them better

This can result in a situation where the operation is not being run as optimally as possible. Therefore, when going into the business it will be important to recognise where your own strengths and weaknesses lie so you don’t fall into the same trap.

Play to your strengths and be prepared to delegate jobs that you don’t enjoy or are not good at to someone who will be able to manage them better.

On the whole, buying a resale franchise will usually require a new approach and some fresh thinking.

Your franchisor will be able to advise you which areas may need more attention to turn the franchise around, however, coming into working environment with new enthusiasm and considering improving the way ‘things have always been done’ could get the franchise out of a rut very quickly.

It will be necessary to evaluate every aspect of the franchise from top to bottom to see how overall efficiency can be improved.

From reorganising call routes, to timing stock ordering, it will be necessary to ensure that all processes are being completed in a way that saves the most time.  

Time is money and hours freed-up to spend at the sharp end of the business, meeting customers and building relationships, will result in more of those all-important sales.

Turning around an underperforming franchise is hard work, but it can reap rewards more quickly than starting a brand new business because there will already be an established client base.

With some fresh eyes and enthusiasm and support from your franchisor, it could be possible to be bringing home an excellent income very quickly.



About The Author

Michael Johnson 
Michael is a guest author for FranchiseSales.