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Guide to Buying the Right Franchise for You

Guide to Buying the Right Franchise for You

When you buy a franchise, consider the pros and cons of choosing a new or existing business.

Congratulations, you’re almost there! You’ve decided to buy a franchise and know what franchisor you’d like to partner with. The question now is which type of franchise location should you buy – new or existing? There are pros and cons for both opening a new franchise business and assuming ownership of an existing location. While you may already have an idea of which path you’d like to take, it’s important to research the advantages and disadvantages of each before you lock yourself in. Keep these considerations in mind when you buy a franchise to make sure you’re getting the best possible deal and potential return on investment.

Buying an Existing Franchise 

One of the biggest advantages of buying a franchise is the brand equity you get from the moment you open your doors. A good reputation can go a long way in getting a head start on a loyal customer base. Purchasing an existing franchise location takes that a step further since you are essentially buying a fully operational business complete with an established cash flow and trained staff.

This approach allows you to bypass the headache of finding a site, negotiating a lease, building out the property, securing inventory and creating vendor relationships. Aside from any nuances you want to introduce, the business is already up and running, saving you time and possibly money. Purchasing an existing business directly from a franchisee rather than the franchisor can provide more leeway to negotiate price, fee structure and terms.

Keep in mind, you must still perform due diligence and thoroughly research before you buy a franchise to ensure that it is a profitable business with a track record of success. Being in good standing with customers and a solid bottom line are essential. 

Don’t assume a struggling franchise is a fixer-upper that you can turn around. A downturn in the industry, a difficult location, competition, or a host of other possible extenuating factors beyond your control could be the cause. A business with a tarnished reputation is another uphill battle that is wise to avoid. Ownership has its own challenges and struggling from the beginning isn’t the best path forward to achieving success. 

Investigate why the current franchisee is looking to move on and find out how many franchisees have owned the location you are considering. A constant revolving door of owners is a red flag. Also look at the overall closure rate for the 

entire franchise network. If more locations are closing each year, it could be a sign of a poor organization that should be avoided. 

Starting a New Franchise

Although opening a brand-new franchise business does carry more risk, it could also lead to bigger profits and greater rewards. You will be responsible for procuring financing, securing a location, purchasing equipment, hiring staff, and developing a marketing strategy. Even with the brand equity inherent in buying a franchise, it will take time to cultivate a loyal customer base. This involves a lot of hard work at the beginning but allows you to start your business with a clean slate free of any negative impressions created by the former owner that could deter customers and make earning a profit more difficult.

While existing franchise costs can be more flexible, buying a new franchise may turn out to be less expensive. Purchasing an existing successful business can come at a higher price for the “goodwill” value of the existing cash flow and customer base. Although a fantastic asset to have, it may not be one you can afford. Opening a new franchise business location will require more work upfront, but the money you may save and the opportunity to make your business your own right from the start could be worth it. 

When you buy an existing franchise location, you may have to buy the store as-is and not be able to make any improvements to it for some time. In some industries having state-of-the-art, highly efficient equipment is imperative to the success of the business. When you buy a new franchise location, there’s a greater likelihood of securing new or at least newer equipment and facilities.  

The Right Choice Depends on You 

Buying a franchise is a big investment that requires a significant amount of research to ensure you’re selecting not only a profitable franchise, but the right fit for you. Whether to buy a new or existing franchise business depends on your personality, preferences, and business goals. If you have a higher risk tolerance and feel it’s important to start at the beginning so you can put your mark on the business right away, a new franchise location may be the best option. If you’re looking for an established location where you can keep an already good thing going, buying an existing franchise could be your best bet. There is no right or wrong answer, the right choice depends on you.

2023 Entrepreneur's Franchise 500 Top Rated for Veterans badge

We Proudly Support Our Veterans

Participating partners with the VetFran program, The UPS Store offers qualifying veterans $15,000 off their franchise fee to start their new business. To learn more, contact The UPS Store Franchise Development Team.

Entrepreneur's Franchise 500 Ranked #4 in 2023 badge

Ranked for over 30 Consecutive Years

The UPS Store has been ranked #1 in the postal and business services category for over 30 years and remains in the top 5 overall for the seventh consecutive year according to the Franchise 500 list.

Kristin Howard

Franchisee, Michigan

The reason my husband and I decided to go into franchising and specifically with The UPS Store, is the different opportunities we're given with the business. The UPS Store has name recognition as well as opportunities to expand.

Debbie Adams

Franchisee, Kentucky

What I enjoy most about being a The UPS Store owner is working with my customers. We are the solution specialists for our customers.

Jim George

Franchisee, Illinios

My favorite part about The UPS Store network is the camaraderie with other franchisees. Everybody loves to help everybody else. You’re really part of a family.

Greg Murray

Franchisee, Florida

The interesting thing about The UPS Store is that when a customer walks through the door there's an extremely high probability that they're coming there to do something that is important to them. So at the end of the day, what we do for customers is very important and they are trusting that we are going to do it well.

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Mariana Huberman

Franchisee, Washington, D.C.

One of the things that I love about The UPS Store franchise system is that you're not ever in this by yourself. The franchisees of The UPS Store network are great.

Heidi Morris

Franchisee, Colorado

The thing I enjoy most about being a The UPS Store franchisee is I get to get up, go to work and know that I'm helping other business owners succeed in what they're doing.

Bob Brown

Franchisee, Tennessee

Owning a The UPS Store franchise has changed my life because it's finally given me the opportunity to engage my customers and my staff and be able to take real pride in what I do. As a franchisee, we get faced with solving peoples' problems every day and we do everything we possibly can to try to help.

Marie Jensen

Franchisee, Oregon

My favorite thing about The UPS Store is the variety. I love the variety of customers, I love the variety of services; getting to know the customers, meeting their needs, finding out how we can help them accomplish what they need to accomplish and seeing how happy they are. That makes me ecstatic.

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Tad Mollnhauer

Franchisee, Florida

With the products and services that The UPS Store provides we can make a difference in people's lives and that is the best reason for being a The UPS Store owner.

Joy Batchelor

Franchisee, Idaho

What makes being a The UPS Store franchisee worthwhile at the end of the day is the customers. The customers treat us like we're family.

Paul Erchinger

Franchisee, Texas

One nice benefit of owning a The UPS Store franchise for me has been that it gives me the opportunity to be more involved in the community. As I make relationships with others it seems like no matter what the environment is, in one way or another business comes out of that and that's not my objective—it's been a secondary benefit to being involved in the community.

Chris Reminder

Franchisee, Ohio

There are several things that I really enjoy about being a The UPS Store franchisee. First and foremost it allows me to get to know the people in the local community and that is a lot of fun. We get to see people on a regular basis. We get to know their life stories. That's a lot of fun.

Bruce Jones

Franchisee, Kentucky

Since we have joined The UPS Store, our life has changed by just having more time to spend together as a family. We've been very fortunate with the stores that we have and we have a great staff that looks out for our best interest and we look out for theirs.

Lonnie Williams

Franchisee, Oklahoma

What makes The UPS Store so successful is it gives each individual an opportunity to grow with the network and just meet the challenges that are brought to them on a daily basis. Every day gives us a new opportunity to help another person, to help another small business, to answer a question and to solve a problem.

Jeff Graham

Franchisee, Alabama

I love my customers. I love my employees. I love every person, every face that comes into my store. I enjoy every day going into work and I can't see doing anything else for the rest of my life.

Stacie Stigar

Franchisee, Alaska

I think that this franchise is so successful because of all of the resources that are available to us as center owners—we have marketing materials, we have so many different opportunities for help from the home office, and it just really makes for a great franchise.

Don Pollard

Franchisee, New Jersey

I think the thing that makes this franchise successful is a number of things. First of all we have an outstanding system, we have a great product, a great brand, and we're able to attract dynamic people to run these centers and run the business. So I think when you put all that together it really provides for a winning combination.

Mary Ellen Nichols

Franchisee, Tennessee

The thing I love about the franchise is that you have the UPS name backing you but yet you also have the autonomy to make your own decisions to promote.

Laura Griffin

Franchisee, Florida

In the eight short months I've owned my The UPS Store it has really changed my life. I've gone from being an employee of someone else to being an employer of my associates. It's a big responsibility but it's exciting every day.

Sandy Scandrett

Franchisee, Wisconsin

Being a The UPS Store franchisee has improved every aspect of my life. It's very rewarding financially, professionally, and emotionally. I have a large number of regular customers who are really, really appreciative of everything we do.

Kristie Robison

Franchisee, Alabama

I would say owning a The UPS Store location has changed my life to where I have more time and flexibility. In owning your own business you get your store up and running and you get employees that you can trust that are going to help keep your store running. This allows me to attend my two boys' ball games and also travel and do things with them so it has really changed my life for the better.