Significant numbers of established franchises are offered for re-sale in the franchise industry.  Owners sell for a variety of reasons such as: cashing in for retirement, spouse job relocation, family circumstances, health issues, other business interests, narrow margins because of poor management and banker pressure.  These present opportunities for buyers.  In our 2009 economy asking prices are down and terms are loose.  

 In view of the huge industry size, only one out of one hundred franchise establishments for sale equates to 8,500 franchise businesses on the market.  According to a 2009 PricewaterhouseCoopers LLP report prepared for the International Franchise Association, there are more than 850,000 franchise establishments.  Price Waterhouse puts franchise jobs at 9,578,000 and economic output at $835 billion.  These are real numbers.  The IFA is the preeminent voice and acknowledged leader for the industry worldwide. The Small Business Administration puts the number of franchise concepts (brands) above 2,500 and lists 1,065 in their Franchise Registry.  The SBA Registry lists those franchise systems whose franchise agreement has been pre-approved by the SBA, thereby shortening the loan process and ensuring consistent eligibility decisions. 

Due to our down economy income for many franchises has dropped significantly.  This has had a dramatic impact on prices and terms.  Business owners are pricing their establishments to sell.  Bank financing practically dried up during the worst of the economic crisis and severely limited the number of potential buyers.  Previously, seller financing was not offered and when it was negotiated, it seldom went above 20 per cent of the purchase price.  Now, sellers are practically acting as bankers.  Seller financing is common and ranges up to 50 per cent of the purchase price.  

It’s a buyers market.  If you are considering buying a franchise resale and have a nest egg of cash, you will find some very willing sellers.  The question is, are you willing to take a calculated risk in order to position yourself for exceptional profits as the economy recovers?

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