Did you know more Canadians are skipping the hassle of starting new franchises and choosing to buy established ones instead? For franchise owners thinking about selling, this trend offers a chance to capitalize on a market brimming with eager buyers.
But why is the demand for franchise resales growing so quickly, and how can you, as a franchise owner, make the most of it? From shifting market dynamics to strategic selling tips, we’re breaking down everything you need to know about this booming trend—and how working with a business broker can help you navigate it successfully.
What Are Franchise Resales?
Franchise resales involve purchasing an existing franchise location rather than starting a brand-new location from the ground up. Unlike opening a new franchise, which requires scouting for an ideal location, securing permits, hiring and training staff, and building a customer base, buying a resale allows buyers to step into a fully operational business. This means inheriting an established customer base, a team of trained employees, and systems that are already running efficiently.
Additionally, buyers often gain the advantage of taking over a franchise with proven revenue streams and historical performance data, giving them confidence in the business’s potential profitability. The infrastructure, including equipment, vendor relationships, and brand reputation in the local market, is already in place. For many buyers, the ability to focus immediately on growth and operations—rather than navigating the initial hurdles of setup—is one of the biggest draws of investing in an existing franchise.
Why the Demand for Franchise Resales is Growing in Canada
Several factors contribute to the increasing demand for franchise resales across Canada:
- Proven Success Rates
Buyers are increasingly attracted to franchise resales because they offer lower risks than starting a brand-new location. Some studies show that existing franchise locations have a success rate of over 90%, significantly outpacing independent startups. - Challenges in Securing New Locations
The quick-service restaurant industry, for example, is grappling with limited prime real estate availability. As reported in Western Investor, new developments in urban areas are scarce, driving entrepreneurs to seek resales of existing locations as a viable alternative. - Retiring Franchise Owners
With an aging population, many franchise owners are looking to retire. This creates a steady stream of opportunities for buyers to acquire thriving businesses.
What This Means for Current Franchise Owners
This trend represents a golden opportunity if you’re a current franchise owner. Here’s why:
- Higher Buyer Interest: With more buyers competing for established locations, franchise resales often attract premium offers, especially if the business demonstrates consistent profitability.
- Quicker Transactions: Increased demand can lead to faster sales, allowing owners to transition sooner rather than later.
- Favourable Financing Options: Buyers may find it easier to navigate the business loan landscape for proven businesses.
However, selling your franchise successfully requires strategic planning and the right support.
How a Business Broker Can Help You Maximize This Trend
Accurate Valuation
One of the most important ways a business broker adds value is through accurate valuation. Experienced brokers understand the complexities of franchise resales and can ensure your business is priced competitively to attract buyers while maximizing your return.
Without this expertise, franchise owners risk undervaluing their business, leaving money on the table, or overpricing it and scaring off potential buyers. Both scenarios can delay the sale and reduce your chances of a successful transaction.
Marketing Expertise
Marketing your franchise effectively is crucial to finding the right buyer, and this is where a broker’s expertise shines. They leverage their extensive networks and experience to target the right audience, ensuring your franchise is seen by serious and qualified buyers.
On their own, many owners struggle to attract the right pool of buyers, wasting time on unqualified leads or failing to present their franchise in the best possible light. This results in missed opportunities and prolonged time on the market.
Streamlined Negotiations
Negotiating the terms of a franchise sale can be intimidating, but brokers simplify the process by acting as intermediaries. They ensure both parties’ interests are represented, facilitating fair and transparent negotiations.
Negotiations can quickly become tense or stall without a broker, especially if emotions or misunderstandings get in the way. Missteps during this phase can lead to lost deals or unfavourable terms that could have been avoided with expert representation.
Compliance Support
Franchise agreements and resale conditions are complicated and require careful attention to detail. A business broker ensures you meet all legal and contractual obligations, preventing potential delays or disputes that could derail the sale. Attempting to navigate these complexities alone can expose you to legal risks, compliance issues, or penalties if something important is overlooked.
Are you thinking about selling your franchise? Let’s talk! At Acuity Business Group, we know the ins and outs of franchise resales and can help you get the best deal. From boosting your business’s value to connecting you with the right buyers, we’re here to make the process as smooth as possible. Get in touch for more information.