Home – New Forums Starting your journey Expansion by buying another shop

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  • #990874
    ad2405
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    Hello all.. its been a while.
    Me and my business have been going along very nicely.
    The opportunity has come along for me to purchase another shop which is actually a franchise (mine is not). They are selling it for the value of the stock so no goodwill (its not worth much anyway).
    The shop has been run down and needs a lot of work… this does not worry me as I feel I am very capable of fixing it up. However I am worried about it effecting my current business.
    The main benefit I see is the ability to buy bulk stock at a cheaper rate, and also share stock ie: when one store is out of stock, we could it from the other until more stock arrives. We can share a delivery driver and the administration side can be done together as well such as BAS, Super, Payroll etc etc.

    I have wanted to expand for a long time and last year we went down the path of getting a bigger shop but we just could not find anywhere suitable and we have too much goodwill where we are to just leave. However buying a 2nd shop makes sense…. staff is really the main problem so I would need to hire at least another person that would be almost like a store manager.

    Does anyone have any thoughts? shared experiences? etc etc

    #1178917
    MissSassy
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    This is a very open ended post with lots of questions and I am sure you will get lots of different experiences.

    My first thought is too look into the Franchise agreement that you may get with the stock or is it stock alone with no agreement! This can be a big issue if you don’t get professionals to look at it.

    Like anything – do all your professional checks and don’t get caught up in the excitement and allow that to cloud your judgement.

    #1178918
    ThexArm
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    My only suggestion would be to look at the royalty fees you need to pay the franchisor on monthly basis.

    Yes, it sounds good to buy a franchise at below costs. On the other hand you will be sharing your profits in the form of royalties for all your hard work.

    #1178919
    ad2405
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    Thank you for your responses.

    I have done lots of research and also talked to the franchise area manager. I actually looked into turning our shop into a franchise a few years back so I have been through all the details so I am quite comfortable with that, I see it more as a bonus getting the franchise as part of it.

    #1178920
    alliedib
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    One question – does the franchise agreement allow you to transfer stock to a non-franchised store?

    They may have an issue in you buying stock in the franchise to sell at a no on-franchise store…

    Regards,

    Mark

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