Buying a franchise resale comes with a fresh set of challenges and opportunities compared to investing in a new franchise location. In this article, BusinessesForSale.com takes a look at some of the pitfalls you should try to avoid, and how to prioritise your time and money to get the most out of your investment.

Be Prepared to Muck In With Your Team

The most important factor in any franchise investment, as most franchisees will tell you, is your team. Whether you’re investing in fast food, adult care or home repair – you won’t get far without a skilled and motivated team to back you up. Purchasing a franchise resale puts you in a unique situation, because you’ll be arriving fresh as the new owner, but many of your staff will have been there for years.

So first things first – be humble. You can’t just drop in as the new owner and expect to have everyone’s respect from the get go. You’ll need to show your team you’re willing to muck in – work a couple of shifts alongside your staff at all levels of the business, whether its cooking, cleaning, admin or management. If you can empathise with the day to day work your employees are taking on, you’ll be able to manage them better and you’re more likely to earn their trust.

Some franchisors will require you to do this, but even if they don’t it’s well worth the time investment. Maximise any and all training opportunities you get in the early stages, and it’s sure to pay dividends later.

Be Picky When it Comes to Location

Location is another hugely important factor to consider when investing in a franchise resale. You might have a bit less choice over this with a resale than a brand new location, but that doesn’t mean you have to settle. Make sure you do your research and thoroughly understand the opportunities and challenges of the location you’re considering investing in. There’s plenty to be done in the ‘getting to know you’ phase before you jump into a long-term, committed relationship with a franchisor.

But what red flags should you be on the lookout for at this stage? A reluctance to provide information is one – that could be things like footfall data, sales numbers for competing businesses in the area, or unclear finances. When you’re scrutinising the location of your franchise resale, you should also be thinking constantly about demographics. It isn’t just a case of how many people visit your location, but who they are. Do they fit your target audience? If not, could you convert them into potential customers? To do so you’ll need a strong business plan and some thorough market research.

Do Your Due Diligence

Speaking of thorough, you’ll need all your investigation skills to hand when you get to the due diligence phase. Once you’ve identified a promising franchise resale opportunity, it’s time to ask some questions. Why did the existing owner move on? Ideally you’d like to find a resale that’s being sold due to retirement or personal circumstances as opposed to poor performance or business fatigue.

You should ask your franchisor about the quality of the equipment and inventory – does it need replacing? Will you be footing the bill? How much employee turnover has the business seen in recent years, and could this trend continue? Is the business reliant on one sales person, client or season for the majority of their business? Don’t get caught out by any traps such as these, and don’t be afraid to make people a bit uncomfortable if it means avoiding a financial hit further down the line!

Keep an Eye on the Details

Lastly, don’t forget to keep an eye on the fine print. Are there franchise transfer fees hidden in your contract, or any upcoming renewals or obligations you’ll be expected to repeat? That could be anything from paying for staff training to replacing broken equipment. Every cost adds up, so it pays to think outside the box.

Before you finalise your choice of location, you should also give a thought to any zoning or building regulations in the area, as well as any upcoming developments and builds. How has your chosen location changed in the last five, ten years? A franchise investment is a long-term one, so you’ll want to make sure you’re not setting up shop in a spot that’s going to transform in the years to come. Whether it’s increasing rents or changes to the demographics that live and work nearby – it pays to take a quick look into the crystal ball, and cast an eye on the future.

So there you go – just a few important things you should keep in mind if you’re thinking about investing in a franchise resale. For more guides, support and advice, you can also visit BusinessesForSale.com’s franchise articles page.