Select a Type of ownership

an existing business
a Franchise
the Legal form of Your Business
Starting your own business from scratch is not
the only way to own a business
You can either purchase an existing one or
enter a family business
People sell their businesses for many different
Retirement, competition, death or illness,
dispute with partners, etc...
There are many different ways to find out
about businesses for sale
A person who sells businesses for a living
Advertisements in the classifieds
Landlords and leasing agents
Lawyers and brokers
Management consultants
Chamber of Commerce
Bankruptcy announcements
The existing business already has customers,
suppliers and procedures, customer loyalty
The seller may want to train the new owner,
along with experienced employees
The business already has a history of sales,
expenses and profit (makes financial planning
Financial arrangements can be easier (the
owner may accept an initial payment and
payments after, monthly instead of going to a
bank for a loan)
Many businesses are for sales because they are
not making a profit.
Serious problems may be inherited (poor
customer relationships may exist)
Lots of Capital $$$ is required.
Write specific objectives about the kind of
business you want to buy, and identify
businesses for sale that meet your objectives
Meet with business sellers and brokers to
investigate specific opportunities
Visit during business hours to see the company
in action
Ask the owner to provide you with a complete
financial accounting of operations for at least
the past 3 years
Ask for important information in written form
e.g. A list of all assets, any legal action taking
place against the business, copy of the existing
mortgage, a list of all suppliers.
Have an accountant and a lawyer help you
review all the material
Determine how you would pay for (finance)
the business
Get expert help to determine a price for the
business (an accountant or valuator)
Most small businesses are family run or related
Pride and sense of mission
Enjoy the fact that the business will remain
another generation
Enjoy working with relatives (more
Love for family is a motivating force that will
push you to work that much harder
Senior positions are often held by family
members regardless of their ability
May be difficult to retain good employees who
are not family members
Family politics
Family-life and work-life become blurred
What if there is no family member to take over
the business or family member does not want
Let’s try to find existing businesses that may be
on sale right now in Cambridge, Region of
Waterloo, Southern Ontario or go further if you
Choose one that may be appealing to you and
answer the following questions:
What is the business
Where is it located
What is the owner asking for in $$$$?
Does the owner have any other requests?
Purchasing a franchise is another route you can
take in becoming an Entrepreneur
A franchise is a legal agreement that gives an
individual the right to market a company’s
products or services in a particular area
 A franchisee is the person who purchases the
franchise agreement
 A franchisor is the person or company that
offers a franchise for purchase
Franchising opportunities are found in all
sectors of the economy, from automotive to
food, to retail to technology
E.g. Best Buy
Canadian Tire
Franchise fees
Start-up costs
Royalty fees
Advertising fees (nationwide)
The fee the franchise owner pays in return for
the right to run the franchise.
It can run from a few thousand $’s to a few
hundred thousand $’s
Usually nonrefundable
Costs associated with beginning the business
Renting a facility
Equipping the outlet
Purchasing inventory
Weekly or monthly payments to the franchisor
Usually determined by a percentage of the
income of the franchise
Fees paid to support T.V. ads, magazine ads
and other ads that promote the entire franchise
You are selling an established product or
Franchisors offer management, technical and
other assistance and supports to the franchisee
to be successful
Equipment and supplies can be less expensive
A guarantee of consistency attracts customers
Franchises can cost a lot of money and cut
down profits
Owners of franchises have less freedom to
make decisions than other entrepreneurs
Franchisees are dependent on the performance
of other franchisees in the chain
The franchisor can terminate the franchise
There are many things to consider when
purchasing a franchise. You should ask the
following questions to evaluate a specific
1. What is the projected demand for the product
or service in the area that I want to locate in?
2. Will I be guaranteed an exclusive territory for
the duration of the franchise term or can the
franchisor sell additional franchises in the
3. What are the costs and royalty fees
4. How profitable have other franchises in the
area been?
5. What do other franchisees think of the
6. How long has the franchisor been in business?
7. How profitable is the franchisor?
8. What services does the franchisor provide?
9. Will the franchisor help me with marketing,
merchandising and inventory and site selection?
10. What happens if I want to cancel the franchise
To make sure that you are not being misinformed by
the franchise:
 Clearly read and study your documents that the
franchisor gives you
 Be weary of any franchise that does not back up
their financial statements
 Be weary of high pressure sales tactics
 Never allow yourself to be pressured into making
a decision too quickly
 Documents are complicated
 Always consult a lawyer
Research a franchise that interests you.
Research the franchise, and then evaluate the
opportunity using the questions given above.
Google your questions or go directly to the
homepage of the franchise to search for
answers to your questions
Write a short report (1 – 2 pages)on your
At the end of your report, tell whether you
think this franchise is a good opportunity