Anyone with experience acquiring/growing franchise businesses

December 11, 2022

by a searcher from North Carolina A&T State University - School of Business and Economics in Raleigh, NC, USA

Recently spoke with a trusted adviser, who is a personal friend, and happens to be a former M&A advisor (lower middle market), and expressed my interest in pursing entrepreneurship through acquisition. He advised me to take a serious look at acquiring franchise businesses. He gave a few valid reasons, but I’m interested to see if anyone here has experience with purchasing and growing franchise businesses. Would love to hear your perspective, as well as pros and cons of going this route.

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Reply by an intermediary
from Wake Forest University in Winston-Salem, NC, USA

Disclaimer -- I own a franchise and am a regional director of one. I have also resold many and helped purchase many (including a few folks that are doing rollups within their chosen franchise brand). There is also a continuum of owner roles, from "buying a job", to an executive model, to a consolidator. The first thing to know about franchise brands is that they are all not created equal and can vary from the great to the not so great as much as any business. Buying one is also a dual decision -- to join that franchise brand and the individual purchase of the specific business owned by the franchisee you are looking to acquire. Then, when conducting the transaction, there are three parties in the transaction, the buyer, the seller, and the franchisor.

Reply by a searcher
from University of Virginia in Fort Lauderdale, FL, USA

Adrian, there some pros and cons of franchise investments. I have worked as a franchise system developer for close to a decade now. Great franchises have proven plug and play systems and methodologies that if you follow correctly, greatly increase your likelihood of business success.

Mature franchises have proven brands that are recognizable in crowded markets.

The drawbacks are that you will be committed to paying royalties to the franchisor for the life of your business and you are not in control of the franchise brand and major system wide franchise decisions.

My URL to my site is here: https://newdayconsultingsystems.com/

My father is originally from NC and so I have lots of relatives in the area. Know it well. Would love to jump on a quick phone call if you are interested.

Kimberly Bonner

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