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Purchasing an existing business versus franchising

On Behalf of | Jul 17, 2020 | small business law | 0 comments

Some budding entrepreneurs in the Haddonfield area may wish to own a business but starting a business from the ground up is not their only option. Sometimes a person would rather buy an existing business or even purchase a franchise. The following is a brief introduction to buying an existing business versus franchising.

Essentially, buying an existing business versus franchising boils down to how much control one can exercise regarding their business. Franchising offers a person more guidance with regards to running their business, but the franchisee has less control over how to run their business than small business owners do.

In a franchise, a person purchases the rights to use the franchise’s name, logo and business model. Many franchises are household names, such as restaurants and hotels chains. Through franchising, a person benefits from the name recognition, marketing and promotion of the larger franchise brand, but they must follow the franchise’s business model when it comes to running their business.

In contrast, when a person purchases an already-existing business, they have full ownership over the business. Because the business has already been established, it may already have a customer bases, known operating expenses and experienced employees. When a person purchases an existing business, they get to control how the business is run, but they do not have the external guidance a franchise provides.

Ultimately, the decision whether to purchase an existing business or a franchise is an important one. Both business types have advantages and disadvantages. The information in this post should not be relied upon as legal advice so potential business owners in New Jersey will want to seek professional guidance when making these important decisions.


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