Buying a Franchise Resale vs. Opening a New Unit
Resales offer immediate cash flow but come with their own risks. Here's how to evaluate which path fits.
A franchise resale is the purchase of an existing franchised unit from a current owner. Compared to opening a new unit, resales come with very different risk profiles and economics.
Why Buy a Resale
Immediate cash flow, established customer base, trained staff, working systems, and a known revenue baseline. You can underwrite a resale against actual P&L data instead of franchisor projections.
Why Avoid a Resale
Resales often sell because the existing owner is underperforming, has hidden problems, or is exhausted. Inherited staff may not transfer well. Equipment may need replacement. Reputation in the market may need rebuilding.
How to Underwrite
Request 3 years of P&L statements, monthly sales data, customer counts, and lease terms. Have an accountant verify the numbers. Visit the unit unannounced. Talk to staff and customers.
Negotiating Price
Resales typically sell at 2.0–3.5x SDE (seller's discretionary earnings) depending on category. Adjust down for declining trends, lease issues, or operational problems. Always include franchisor approval as a closing condition.
Find Your Perfect Franchise Match
Take the free 6-question quiz and we'll surface the brands that fit your budget, lifestyle, and goals.