Should I Buy an Existing Franchise that is Failing?
I am a firm believer of learning from past mistakes. In business, you need to make many mistakes before you can succeed. Sometimes you can learn from other people’s mistakes and turn a failing franchise into an empire.
I am pretty sure you know the name Dave Thomas. Dave Thomas was the founder of the Wendy's franchise. Many people do not know that Dave's first experience in the franchise world was with the Kentucky Fried Chicken franchise. By simplifying the menu, Dave turned around four failing KFC franchises and within four years sold the restaurants back to KFC and received a percentage of the sale. This made him a millionaire at the age of 35.
Don't rule out buying an existing franchise that is failing. This could be your opportunity to buy into a franchise system for much less than it would cost to open a new one. I am not saying that every franchise that is failing can be turned around, but if you look hard enough you may find a diamond in the rough.
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KFC may have let Dave simplify the menu, but typically most franchisors are less willing to allow modifications to the menu.
The important thing would be to get permission first from the franchisor prior to getting involved.
Keep in the mind the business is only worth a multiple of earnings or value of assets only. Franchise or no franchise.