There are over 2,500 different franchises for sale right now. Trying to choose the right one might seem like an impossible task. If you are a first time franchise purchaser, where should you begin? The answer is not easy; every franchise is unique and there are hundreds of characteristics to review. That said, certain characteristics keep popping up when we examine the best franchises.

Here are SmarterFranchises three keys to a great franchise:

1. Multi-unit Ownership
The proof is in the pudding. The best indication that a franchisee is happy with his business is if he spends more money to purchase another unit or an additional territory. The logic is the same as why Honda has such a strong reputation in the car market. If your uncle Jeff has bought three Accords in a row, Honda must be doing something right.

For the most part, multi-unit owners start with one store which becomes so successful that the want a second and so on. In order to finance a second store, a lender will examine the first store’s cash flow. If a franchise wasn’t financially viable, it would be nearly impossible to open additional units.

Multi-unit ownership is also an indication of operational efficiency in a concept. With some franchises, there is so much work that is impossible for the franchise owner to focus on anything but day to day operations. The book, “The E Myth” talks extensively about this trap of getting stuck “working in your business” vs. “working on your business.” Even if you never plan to open multiple units, this is an important characteristic, because more likely than not, you would eventually like to retire or at least take a vacation one day.

Be wary of franchise owners who explain low multi-unit ownership by suggesting franchisees make enough money with just one unit. If there is one thing history has shown, people rarely decide they have “enough” money.

2. Proven Franchisor Track Record
There are three items to think about when examining the franchisor’s track record. The first is an understanding of how much risk there is that the franchisor might go out of business. Unfortunately, many of the 2,500 franchise concepts available just won’t make it as sustainable businesses. If you purchase one of these concepts, you may lose much of your investment.

Second, the franchisor’s track record should give you an indication about the quality of the concept. Did the franchisor own several successful stores for many years before deciding to franchise his concept or did he just decide one day that there was good money in franchising so he better come up with a concept.

Third, franchisors with longer track records have more established training and support programs. While you might save a few thousand dollars buy getting into a franchise early, chances are you won’t get much for your investment. New franchisees haven’t had the time to put together development support or training programs or marketing campaigns. Also, if you are one of the first buyers, you are the guinea pig which often means more risk. Maybe a new food concept works great in a mall food court or maybe it doesn’t? Wouldn’t be nice if you weren’t the one who had to run the experiment?

3. Strong, independent franchisee association
Unfortunately, the unspoken reality is that the franchisor’s and franchisee’s interests aren’t always aligned. Eventually, there will be disagreements over finances, marketing programs or development issues. Knowing that issues are sure to arise, it is helpful to know that you will have an organized group of franchisees who can relate to your situation. Independent associations have many benefits. In addition to creating leverage for the purpose of negotiating with the franchisor, an association also can improve communication among franchisees. Independent associations also allow members to pool resources to hire competent professionals such as lawyers or financial advisors or marketing consultants. Finally, like with any organization, a collective, institutional memory is created. The AFA has an excellent article on associations on its site

It is also a negative sign if the franchisor goes out of its way to discourage an association. It usually means that the franchisor does not have the franchisees best interests in mind and is afraid of having to deal fairly with franchisees.

In addition to independent associations, franchisees may also develop a co-op to purchase goods at a discount or control a portion of the system’s advertising budget or develop a lobby group for a specific issue. All of these our good signs.

Why should you buy a business versus starting
your own? Here are ten solid reasons:

1) The success rate for businesses purchased is much higher than the success rate for a new business startup. Just ask your accountant.

2) An established customer base means immediate cash flow! Enough said.

3) It is much easier to find capital to buy an existing business than to start a new one. Why? See reason #2 above. Bankers are not dumb. They know the statistics. Bankers are much more willing to lend money when there is an identified source of repayment already in place.

4) Many sellers are willing to carry-back financing at very reasonable terms. Why? For income tax reasons. They would prefer to defer any gain over a longer period versus taking a gain all at once. And if a seller is willing to carry back any part of the purchase price, it tells you the seller believes that the business will continue to succeed under your management.

5) Projections for a startup are nothing more than an educated guess. Projections for existing businesses for sale are based on historical results. Which is more reliable?

6) Startups always, I repeat, ALWAYS cost more to start than expected. For the money you will end up spending to start that new business (which may or not succeed) you could have probably purchased an existing business with immediate cash flow.

7) You may actually need to come up with less cash for your down payment plus working capital when you buy an existing business than you would need if you started your own business. Why? With owner carry financing and a performing track record, your existing business purchase is very bankable. A new startup is not very bankable. The cash required to get the new business to a cash flow positive is unknown. And it eats cash.

An established web site presence. Although each business will vary, most businesses rely to some extent on a business web site. The longer a web site has been established, and the more traffic that web site receives, the more value search engines place on that site. This is important as your web site ranking determines your placement in search engine results. In other words, building a new web site is not enough. Customers still need to find it. A quality, established web site can be a real asset, something that a new startup will not have.

9) Many businesses listed for sale are actually very fairly priced. One can often find a business for sale that will sell for three to four times cash flow. Think about it. Four times cash flow equates to a 25% annual cash return on investment. 25% will usually cover all debt service and still leave a decent return for the investor.

10) Less brain damage. Just ask anyone who has been “wrung through the wringer” by starting their own business. Always wondering if customers would really come.

Think about it. It really is a pretty easy decision.

This business financing guide shows the items that you will need to prepare if you are planning to get loan from financial institution when you buy business for sale. Getting financing can be easier with knowledge about the financing and with complete preparation of documents and statements in process of buying business for sale

Step 1. Find a Business for sale at BusiMarket.com site for businesses for sale and commercial property for sale on the market. As soon as a property is found, make any necessary contacts to sellers.

Step 2. Get Purchase and Sale AgreementGet the sale agreement from Brokers, attorneys, or Escrow companies.

Step 3. Find a LenderFind a Loan Officer that will take care of your financing needs.

Step 4. Prepare Required Documents – Purchase and Sale Agreement for the Business or Commercial Property,
– Personal Financial Statement provided by the lender,
– Income tax returns from both buyer and seller from the last three years
– an up-to-date income statement,
– Resume from the buyer,
– Lease Agreement(if applies),
– Assignment for Lease (if applies),

Step 5. Finally, wait for the loan approval (usually takes 2-4 weeks)

Since the financing process can be different on type of business, location, and buyer’s situation. The information above is for information only and BusiMarket.com does not guarantee accuracy of information.

Home buying is a big deal, but it doesn’t have to be difficult.

People buy homes for many different reasons. Most buy for the sole purpose of living the American Dream, others use the home buying market as an investment tool, and some even use the margins inherent in real estate transactions as their daily income. Many homes are sold each year as foreclosure listings. These can be purchased for a significant discount over market value.

There are many factors one needs to consider when buying a house, whether to live in or as an investment opportunity through a foreclosure listings directory.

First and most important is do the research. Know what you’re buying.

One of the most important factors to research when buying a home is location. City, State, and, even neighborhood should all be considered carefully.

We’ve heard it said over and over again. “Location, Location, Location”

So why is location so important? Well, unless you plan to live in the house forever, eventually, you or your estate will want to sell it. You want the home to appreciate in value. You also want to be able to sell quickly. What you don’t want is a house for sale sign sitting in your front yard for years.

It doesn’t matter how wonderful your property is, you’ll have a very difficult time trying to sell your home for top dollar in a bad neighborhood in a reasonable amount of time. This doesn’t necessarily mean that it’s a bad home. It simply means that there will be less demand. That’s not what you want when you decide or have to sell your house.

One needs to apply a neighborhood litmus test when buying a home. Things to consider include schools, nearby growth and development, and convenience. Local governmental agencies often list a school district’s rankings. This information can also be found on the Internet. If all else fails, real estate agents have access to this information and can be very helpful. The value of your home will appreciate much more if it is located in a neighborhood with good schools.

New construction nearby also plays a great role in improving the value of a house and should definitely be considered when buying a house. A neighborhood which is on the outskirts of a new development will benefit from the higher prices of the newly constructed homes. If, however, the neighborhood exhibits signs of decline, one should think twice before buying that house.

One other item to consider when looking for a house for sale is it’s proximity to places of convenience like shopping centers, transportation hubs, and parks. Remember, someone else will be house buying from you in the future. It will happen. And… They will be looking at the same factors at that time.