Unlock the potential of business ownership with "Avenues of Acquiring a Business," a comprehensive guide that explores franchising, leasing, and outsourcing as viable pathways. Learn the definitions and roles of franchisors, franchisees, lessors, and lessees, and understand the contractual implicat...
Franchising: marketing concept whereby the franchisor licenses the use of its business
model, brand, procedures + sell branded g/s to franchisee → In return, franchisce pays
certain fees + agrees to comply with obligations
Franchisee: pays a fee to frarchisor for right to use trademark + proprietary Knowledge
Franchisor: person or company that runs business model + related trademarks
Leasing: contract outlining terms under which 1 party agrees to rent g/s owned by another
party
Lessor: someone who grants a lease to someone else (owner of asset)
Lessee : person who rents asset from lessor (known as tenant)
Outsourcing: agreement in which 1 company hires other co to supply g/s that could be
done internally by employees
Profitable: when B is making or likely to make a profit (incomes - expenses)
Why Buy An Existing Business?
Established Business
→ should not take up to much time to set up as all requirements already in place
, Established Customer base
→ establioned businesses have an existing customer base
Name + Reputation
→ company can come with goodwill from established reputation
↳ people are creatures of habit = people will shop store be they have done it before
↳ state of transfer of ownership includes phone number, website and name
Known Market
→ market research has already been done for business
→ Owner can use past info to form future plans
Mentorship
→ starting a business can be overwhelming
→ owner of existing business may agree to mentor for some time
Cash flow
→ already has customers + continued cash flow
→ Start up can take long time to attract new customers + get cash
→ offers greater security over working capital + help owner improve cash flow sooner
Financing
→ existing B = 3+ years of profitable financials which makes it easier to seure financing
from bank, gov, venture capitalist
Current Staff
→ 1 in 10 start -ups make it past the 2nd year and many fail during growth as businesses
tries to hire more staff.
→ having trained staff in place ensures a smooth transfer and contributes to the success
of business
Market position
→ entrepreneur buys an existing business can increase market position
→ can also increase customer base, marker share + resources
Franchising
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