Buying an Existing Franchise Location (Resale): Pros, Cons, and Costs

Buying an existing franchise location, often called a franchise resale, means taking over a franchised unit that is already open, staffed, and earning revenue, instead of opening a new one from scratch. BizBuySell’s Q2 2026 buyer survey found that more than one in five buyers named buying an existing franchise location as their most desirable opportunity, and another 9% preferred opening a new franchise unit. The appeal is easy to see: you skip the build-out and the long ramp-up. The trade-off is that you inherit the history, good and bad.

What a franchise resale actually is

In a resale, the current franchisee sells the business to you, usually with the franchisor’s approval. You typically buy the operating assets, the lease or lease rights, the customer base, and the right to operate under the brand for the remaining term of the franchise agreement. You are not buying the brand itself. The franchisor still owns that and still sets the rules.

Most franchisors have a transfer process. You will usually need to be approved, complete training, sign the current franchise agreement (which may differ from the seller’s older one), and pay a transfer fee. Ask early, because the franchisor’s approval can make or break the deal.

Why buyers like resales

• Existing cash flow. You can review real sales, expenses, and tax returns instead of projections.
• A faster start. The location, equipment, staff, and customers are already in place.
• Lower perceived risk. A unit that has operated for years has already proven the site works.
• Easier financing in some cases. Lenders like a track record. See our guide to financing a business opportunity.
• Franchisor support. Training, systems, and marketing programs usually come with the brand.

The downsides to weigh

• You pay for performance. Sellers price in the business’s earnings, so you pay more up front than for a new unit’s franchise fee.
• You inherit problems. Deferred maintenance, aging equipment, weak staff, or a poor local reputation come with the purchase.
• Lease risk. A short or unfavorable lease can sink an otherwise good deal.
• Franchise agreement terms. The remaining term, renewal conditions, and required remodels matter as much as current profit.
• Limited control. Pricing, suppliers, and marketing are often set by the franchisor.

What it costs

There is no single price, because it depends on the brand, the location, and the unit’s earnings. Think in categories rather than one number:

• Purchase price, commonly based on a multiple of the unit’s earnings, plus inventory and equipment.
• Transfer fee charged by the franchisor, plus any required training costs.
• Working capital to cover payroll, rent, and slow months after you take over.
• Required upgrades, such as remodels or new equipment the franchisor may demand at transfer.
• Professional fees for an attorney, accountant, and sometimes a broker.

Ask the franchisor for current fee schedules in writing. Do not rely on the seller’s description of what you will owe.

Resale vs. new franchise vs. independent

For a deeper comparison, read franchise vs. independent business opportunity.

Due diligence checklist for a resale

1. Get the franchise disclosure document (FDD). Under the FTC Franchise Rule, franchisors must provide it at least 14 calendar days before you sign or pay. In a resale, also ask for the seller’s agreement and any amendments.
2. Verify the financials. Compare tax returns, bank deposits, and royalty reports, not just the seller’s profit-and-loss statement.
3. Talk to other franchisees. The FDD lists current and former owners. Ask about support quality, hidden costs, and whether they would buy again.
4. Read the lease. Check the remaining term, renewal options, rent increases, and whether it can be assigned to you.
5. Confirm franchisor approval in writing before you pay a deposit.
6. Inspect equipment and compliance. Look for required upgrades, open violations, or pending disputes.
7. Understand why the owner is selling. Retirement is different from a falling territory.

Our full process is in how to buy an existing business: due diligence, and the warning signs in 12 red flags to check apply here too.

Where to start looking

You can explore franchise opportunities in the SmartBizOpps directory, including Snap-on Tools Franchise, Matco Tools Mobile Tool Franchise, and Smart Franchise Investing. Listings are provided by the companies themselves, so treat them as a starting point and request each company’s disclosure documents. For resource help, Franchise Funding . Net is also listed. Franchise brokers and the franchisor’s own resale department are other common sources of units for sale.

Frequently asked questions

Is buying a franchise resale safer than opening a new one?

It can reduce start-up risk because the unit already has customers and a track record, but it is not risk-free. You are paying for past performance that may not continue, so verify the numbers and the lease.

Do I have to pay the franchisor when I buy a resale?

Usually yes. Most franchisors charge a transfer fee and may require training or updated equipment. Confirm the exact amounts in writing.

Can the franchisor block the sale?

Often, yes. Franchise agreements commonly give the franchisor approval rights over who buys a unit, so get approval before you commit money.

The bottom line

A franchise resale can shorten the road to revenue, but the price you pay reflects that head start. Treat the unit’s financials, the lease, and the remaining franchise term as the three things that decide whether the deal works, and get an attorney and accountant to review them before you sign.

Photo by Daniel Watson on Unsplash

This article is general information, not financial, legal, or tax advice. Costs, earnings, and requirements vary by location and by opportunity, so verify details with the company, your state, and a qualified professional before you invest. Listings on SmartBizOpps are provided by advertisers; SmartBizOpps does not endorse or guarantee any opportunity.