This month, we invited Paul Rayment, Business Development Manager at Papa John’s, to share his thoughts below on buying a resale franchise. Resale franchises are franchises that have already been in operation for a significant period of time. Read his fantastic article below!
Buying a franchise reduces the risk of starting a new venture compared with setting up alone. This is because the product or service has already been tried and tested, all training is provided and all assistance is supplied to give the franchisee the best possible chance of success.
Around 90% of new Papa John’s franchisees purchase the licence to run a brand-new pizza outlet in a virgin territory. From the outset, with the support of Papa John’s, they will work to develop an established and loyal customer base and then build on that moving forwards.
However, around 10% of our new franchisees purchase an existing store or what we call a resale business. Resales become available for a variety of reasons – from personal circumstances to franchisees looking at releasing their initial investment so they can purchase more stores and grow their portfolio of outlets. For franchisees looking at buying a resale, this approach can offer a number of advantages: speed of purchase, more flexibility on location and even less risks.
From the time a Papa John’s franchisee is approved to join our valued team, it can take between six and nine months to get the keys for their brand-new store and for it to open. Our team needs to source and secure suitable premises in a superb location, negotiate a favourable lease and manage the store fit-out correctly before handing over the keys. One of the most time-consuming aspects of opening a new store can be gaining the right planning permission. Although we manage the whole process on behalf of franchisees, taking on an existing store, which is already up and running, can result in a much speedier take-over by the new franchisee.
Over the past few years, Papa John’s has seen significant growth and therefore we have found that more and more people are looking at investing in a resale store as there is no new store opportunity close to their home address.
With a resale, there is a real chance for a new franchisee to add value to existing stores. Visibility of existing accounts means it is easy to see just how well the franchised store for sale is doing and where improvements could be made. There is already an existing customer base and we often see a ‘bounce effect’ where an injection of fresh enthusiasm boosts sales. New franchisees often bring a wealth of attributes to identify opportunities and grow the business.
Papa John’s role in managing change-of-hands stores is to protect both the buyer and seller. We thoroughly assess the business and ensure the buyer is aware of any aspects which need to be brought up to standard. It is essential that the fit-out of Papa John’s stores reflect the high quality of our product and so a new franchisee coming in offers the ideal opportunity to freshen up and upgrade the store. This might typically include refreshing the counter, or putting in new flooring or decals or new equipment. The buyer then has the choice to request that the cost of this work is reduced from the purchase price or that the seller completes the work before the sale is completed. We normally find the new franchisee welcomes the upgrade as it is part of the strategy to take the business to the next level.
It might be easy, then, to think the buyer is purchasing a ‘well oiled machine’ but any machine will only stay that way if it is maintained properly! What I mean by this is that our business is a hands-on one. The most successful franchises work within the business. The franchisees that work hard, stick to the basics of providing the very best pizza and service and are proactive with local store marketing are the ones that grow to become the most successful multi-unit owners, with a profitable portfolio of stores to their credit.
For this reason, candidates who are approved to buy a resale store are assessed just as thoroughly as those purchasing new outlets. They still need to do their research and put a business plan together and secure the funding. In this way, we ensure the process is as smooth as possible for the seller also.
As we continue to expand the network, naturally there will be an increasing number of resale opportunities available all offering great investment strategies for new franchisees joining our Papa John’s family. At Papa John’s we welcome applications from enthusiastic franchisees who are looking to develop and grow a business. In return, our experienced team provides all the support needed to get your successful Papa John’s up and running.
As one of the largest pizza companies in the world, Papa John’s has opportunities for franchisees throughout the UK. Help is provided with location selection and full turn-key opening of stores.
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