Existing or Greenfield Franchise?

"Should I buy an existing franchise, or a ‘greenfield’ site?"

If you’re thinking of buying a franchise, you’re likely to come across this question at some point. There are arguments for both, so we should consider them.

Of course, some of these factors may or may not apply, depending on the business.

Existing business

  • Already up and running

  • Has a customer base

  • Has an income stream

  • Likely has a marketing database of prospects

  • Has a presence in the local area

  • Has plant and equipment

  • Has fixtures and fitout

  • Existing staff

Greenfield site

  • Starting from scratch

  • No customer base

  • No income stream

  • No marketing database

  • No presence in local area

  • Brand new plant and equipment

  • Brand new fixtures and fitout

  • No staff

In most cases, a greenfield site will cost less than an existing business, due to the factors listed above.

So, why do it?

So, the question becomes, why would anyone want a greenfield site?

  • An untapped opportunity

  • Blank canvas – it’s yours to create

  • Opportunity to build business value

  • Lower entry price

  • For those who back themselves 

Questions to ask the franchisor

If you’re interested in getting started in a greenfield site, there are some questions you should ask the franchisor, regarding how they will help you get up and running.

  • How will you help me get going – FAST!

  • What proven strategies do you have in place for greenfield sites? e.g. pre-launch promotions, etc?

  • How have other greenfield sites performed? How long did it take them to breakeven?

  • Do your systems specifically cater for start up situations and greenfield sites?

  • What experience do you have in guiding and mentoring new franchisees in greenfield sites?

We’re quite comfortable working with new business owners who are starting their business ventures in greenfield sites. In fact, the majority of our clients started in greenfield sites.

But whatever you do, please be sure to get professional advice before you dive in. Even if the entry cost is lower, this is still a big commitment, both financially and emotionally. There are many factors to consider.

The starting point for us is to prepare a Pre-purchase Review. This will assess the financial aspects of the franchise you are considering, even if it’s a greenfield site.

Let me know if you need a hand.

Peter