Refranchising: Should You Buy In?
Lately, more and more franchise companies are converting a significant number of their company-owned units by selling them to franchisees. This trend, commonly referred to as refranchising or retro-franchising, can be driven by any number of motivations on the part of the company, and it may represent a wonderful opportunity for a careful buyer if the circumstances are right.
In order to understand whether or not purchasing a company-owned unit would be a good opportunity for you, you need to know why the company acquired the unit in the first place and what has changed so that they now want to sell it. There are a number of factors that might motivate a franchisor to acquire company-owned units:
Earnings: Franchise companies often begin acquiring units in their system (either by opening new ones themselves or by buying out existing franchisees) because they believe that this will be a good way to increase their company’s earnings. Continue reading this article.
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