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New Franchise vs. Existing Franchise... Which To Purchase?

Dec 6, 2007
If you're not sure whether to purchase a new franchise, or look at existing franchise opportunities, then this article was written for you. We will discuss the positives and negatives of purchasing a new franchise, and what you must avoid if you're going to get a good return on your franchise investment. After reading this article, you should have a question answered on whether purchasing a new franchise is better than purchasing an existing franchise.

In general, it's wise to invest in existing, successful business model. However, the reason people purchase new franchises are because they provide alternative benefits, mainly they are more cost efficient. Sometimes the difference between purchasing a new franchise versus an existing franchise is in the six figures. New franchises have lower start up cost, because they are more of a risk. If you've always wanted to own a franchise, but can't get all the funding needed, it would be wise to look at new franchise opportunities.

Secondly, new franchises offer more flexibility in the franchise agreement. For example, if you're purchasing a franchise from McDonald's, you'd have very little say in how you could arrange the store layout, where you can locate at, and how you can use the franchise's name. Most successful existing franchises allow for very little innovation. However, new franchises often encourage innovation and idea generation. Specifically, if you can come up with a great idea for the franchise, you can earn a lot more money with it.

Lastly, new franchises sidestep the problem of saturation. Sometimes existing franchise opportunities act like cannibals -- they eat themselves. Two franchises compete for the same market share. However, with a new franchise you don't have to worry so much about competing against the same franchise in close proximity. Also, a new franchise offers a chance to brand a new image in the mind of the customer, which means the chance to be a leader in an emerging field.

If you are looking for a way to start fresh and have the chance to turn your business dream into a reality, then a new franchise may we what you're looking for. If you are nearing retirement and your goal is to make solid investments, then an existing franchise would probably be a better choice for you. While choosing a franchise opportunity is far from gambling, there is gamble in any business choice you make. With proper research and planning you should be able to narrow down your margin or possible failure. My suggestion is to look at your future and financial goals before making a final decision.

In conclusion, a new franchise offers a lot of opportunities that an existing franchise doesn't. If you want to save on price, have more of a say in how you operate the franchise, and experience the chance to gain market share and brand yourself in an emerging field, buying a new franchise could just be the perfect way to go for you.
About the Author
Roger Morad is the expert columnist and article writer for www.ModernFranchises.com - He is an industry expert that reports daily on new franchises and franchise opportunities
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