Ep47 The biggest challenges in buying a franchise right now, with Peter Knight

It’s never an ‘easy’ time to buy a business or franchise, as after all, if it was easy, everyone would be doing it! Peter Knight is The Franchise Accountant, and he has seen a thing or two when it comes to advising hundreds of buyers of franchises on how to proceed.

 

Knowing the biggest challenges is one thing in going about the process of buying a franchise.

 

But how to overcome them are key securing your business if that is the journey you are on.

 

Peter identifies and focuses on several factors that he sees in the market;

• Difficulty in securing finance for your franchise or business
• Higher risk with multiple sources of finance being accessed to complete a purchase
• Awkward information that is difficult to use in order to properly assess a business purchase
• The overwhelm of simply too many franchise options to choose from in the market
• When buying an existing operating business, the fact that the sales figures  are not available / accurate - signalling a red flag
• A look at managing expectations around refit / new equipment costs is also an area that can trip up new buyers off franchises and is covered in some detail.

Peter gives his usual no nonsense take on all of it in this practical, information-filled episode!

0:00 Intro

0:41 The first key challenge is difficulty in securing finance and banks lending against criteria

1:27 The first thing banks look for - do they have a home

2:01 Then look at the business if there are assets there for separate loans in the business

2:29 Splitting loans across the business depending on the needs of equipment in the business

3:12 Risk getting higher with loans closer to being unserviceable despite still wanting the franchise

4:21 Second key thing at the moment - the awkward information being provided to assess a business purchase

6:35 The other end of that is that some brands don’t provide any financial information

7:11 How does he handle when brands don’t provide good information in his advice to buyers

8:01 Third key challenge is overwhelm in too many opportunities to choose from in Australia and which is the right one for that buyer

9:03 A client previously ran a call centre but soon found when he had to make direct sales on his own in his own business, he struggled

10:51 Fourth key challenge not having the figures when buying an existing business - the red flags

13:21 How he works with existing operating clients to help them through equipment and refit costs budgets

14:16 Sellers of business pitching different figures to buyers on and off the books

16:15 Wrap-up

Podcast Produced by:  www.magneticbusinessmedia.com.au

Franchise Stories and Knowledge Base (our other website):  www.franchisebuyer.com.au

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