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September, 2010
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| What You Get When You Buy a Franchise
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When you are looking to buy a business, a franchise can be a smart investment. Anyone can run a franchise as long as you adhere to the company guidelines.
There are many reasons why you should consider buying a franchise:
Successful Business Model
You will have a greater chance of success when you buy a franchise business because there is already a proven model in place for you to follow. Only with a franchise can you own the business independently, while receiving support from the franchisor
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| Investigate Your Financing Options When Buying a Business
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Raising capital is one of the most important requirements when you buy a business. You will be required to prepare a well-thought-out business plan. This is vital not only for when you are using capital to buy a business but also for budgeting initial operating expenses. Additionally, a business plan will help creditors to determine the maximum amount and terms of financing that will be made available to you.
CHOOSING THE RIGHT FINANCING OPTIONS
Since most financial institutions only provide 8
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| Price vs. Value
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A common misconception is that a business’ price is the same as its value. This is not always true. Price can be determined by many factors including deal terms, buyer perception, etc. There are many types of value as well, including fair market value, fair value and value to the buyer. Price can be skewed up by favorable deal terms such as long term financing, low or no interest rate on seller notes, earnouts, and stock vs. cash. Price can be skewed down by unfavorable deal terms such as
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| Valuation Considerations When Buying or Selling a Business
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The single most important decision in making an acquisition (or completing a merger) is in determining the value or setting the price. In a traditional merger, where the acquiredbusiness' shareholders exchange their stock for stock in the acquiring business, the negotiation of price seems simple – what is eachbusiness' stock worth? Although this may sound simple, there are many considerations each must make in valuing the assets or stock of both businesses and/or the target business.
KEY
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