National Brokers Network

Disadvantages of buying an existing business

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Buying an existing business can sometimes cost more money, but you must not be quick to consider this a disadvantage. After all, you will be buying the goodwill of the business.

For the sake of comparison, let’s take a look at the different disadvantages of buying an existing business.

First, it takes a lot of research to determine whether buying a resale, regardless of how profitable the offering, will be advantageous to your specific circumstance or not. You first need to find out why the franchisee is leaving and selling the business. The answer to this question may reveal the truth behind the sale and expose any existing problems the business has.

Second, the facilities and equipment of the existing business may be old and out of date. In which case, they would need upgrading or replacing – incurring more costs.

Third, employees might not stay after the business has been sold. This is another important question you must get an answer to if you are counting on having trained staff in place.

Fourth, the future performance of the business can be affected by many different factors. You would need to look into shifting market trends or neighbourhood changes. You would also need to do some research into the business’ competitors and how they may impact the future of the business you are acquiring.

Finally, you must gain a better understanding of where the business currently stands. If it has been on a decline, you might have a difficult time turning it around, especially if the previous owner allowed it to deteriorate. Winning back old customers can sometimes be more difficult than acquiring new ones. If the business you are looking to buy has developed a negative reputation in the market, you will have an even harder time picking the pieces back up.

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Confidentiality Agreement

In Consideration of the Vendor of the subject business, or any other business introduced to the Proposed Purchaser and their agent National Brokers Network (“the agent”) providing information to the Prospective Purchaser, the Prospective Purchaser agrees:

1. To keep all information provided confidential in respect to the subject business and any other business introduced to the Prospective Purchaser by the Agent.
2. That no information is to be disclosed by the Prospective Purchaser to any third party without consent by the Agent;
3. That it will not use for themselves. Or for others benefit, such information other than to Purchase the subject business or other business introduced by the Agent;
4. That any agreement to purchase the whole or portion of the business shall be exclusively through the Agent;
5. To immediately return to the Agent all such information and other details in written form including any drawings and any copies made of written information, notes, summaries or extracts of any document therefor if any when requested by the Agent;
6. Under no circumstances will the Prospective Purchaser make direct contact with the vendor of the subject business or other introduced business without the prior written consent of the Agent;
7. If the Prospective Purchaser breaches this agreement or buys the business direct from the Vendor, the Prospective purchaser is liable to and indemnifies the Agent for any and all losses the agent may incur including economic loss and loss of income.v

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