What are the advantages of purchasing an already established franchise?

In some franchise systems you may not have a choice because if they are mature systems all, or virtually all territories will have already have been allocated, which means that you would only be able to become a franchisee on a resale by an existing franchisee.  In other franchises which are less mature, the territories which are near your home or in which you are interested may have already been allocated and, here again, you would only be able to take on a franchise in those territories following a resale.

 

If a franchisee who is selling has operated the business successfully, you will, of course, at a price, be acquiring an immediately profitable business.  Provided that you can raise the initial purchase price, which is often calculated as a multiple of profits plus the value of the assets being acquired, then you will immediately be in positive cash flow which is not likely to be the case when you take a franchise and establish your franchise business from scratch.

 

The real question you have to ask yourself is whether you are the sort of person that likes to create something yourself which would suggest that you take a new franchise and build it up from scratch or whether you prefer the challenge of taking a business to a new level in which case you would take on an existing business.