Resale

What it means

In a resale, the buyer takes over an outlet that is already trading, with its established location, customers, staff and revenue history. This is different from a greenfield, where a franchisee builds a new outlet from scratch in a fresh site.

Resales require the franchisor's involvement. The transfer usually needs franchisor approval, the incoming franchisee typically signs a current franchise agreement, and the franchisor must provide the buyer with a disclosure document, just as for any new franchisee.

For the outgoing franchisee, a resale is the main way to exit and realise the value they have built. For the network, resales are recorded as transfers in the disclosure document's network history, and a healthy volume of profitable resales is generally a positive sign.

In practice

A resale can be attractive because you can see actual trading figures rather than relying on projections. Reviewing the outlet's real sales, wage costs and profit lets you assess the unit economics with far more confidence than a brand-new site allows.

The key questions in a resale are why the current owner is selling and whether the price reflects genuine, sustainable earnings. You should still receive full disclosure and cooling-off rights, and you should verify the numbers independently rather than accepting the seller's summary.

A real example

A convenience-store franchisee wants to retire and sells his established outlet, turning over $1.2 million a year, to a new operator for an agreed price. The franchisor approves the buyer, issues a fresh disclosure document, and the buyer signs the current agreement. In the network history this appears as a transfer.

Resale, FAQs