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Am I Ready to Purchase a Franchise?

Guest post by: Mash Bonigala

Article Overview: The first step to jumping into any new business is to determine your objective. What do you want in life? Are you content working for someone else? Do you simply want to own your business for financial indolence sake or do you have a very specific dream you want to build? What are your skills that you will bring to your business? Some people will answer these questions and find that though they are tired of working for someone and want to become financial independent they do not have a business plan.

Am I Ready to Purchase a Franchise?

The first step to jumping into any new business is to determine your objective. What do you want in life? Are you content working for someone else? Do you simply want to own your business for financial indolence sake or do you have a very specific dream you want to build? What are your skills that you will bring to your business? Some people will answer these questions and find that though they are tired of working for someone and want to become financial independent they do not have a business plan. For some of these people owning a franchise can fulfill their objectives without the same amount of risk as beginning a brand new business. Franchising gives you instant name recognition along with a proven business strategy. On the other hand, it can be expensive and you do not have the same freedom to make independent business decisions. When you have made the decision to buy a franchise the work has just begun.

Are You Ready?

Before starting purchasing a franchise make sure your own financial situation is stable. All new businesses require a great deal of time and money to make them profitable. While franchises do not carry the same risk of failure as most new small business, they are still not expected to turn a profit for at least six months. You will not to make sure all of your personal expenses over those six months are covered. The other thing you should consider is your exit strategy. Do you plan to sell the business, give the responsibilities of management to someone else, or offer the business to your children? What is your plan if the business does not succeed as hoped?

Research

There are over 3000 businesses in 80 different industries that offer franchise opportunities. Thorough research into these companies can help narrow down the field. You will want to match up your own skills and business vision with a company that is compatible. You will be signing a legal agreement to become a business partner with this corporation, make sure you are willing to work hand in hand with them. Start with phone interviews to all the businesses that interest you. Use those interviews to narrow down the field to just a couple of choices. Visit the corporate headquarters and attending a discovery day for those businesses. It is also important to contact a franchise counselor before making a final decision. These advisers are generally free to retain and are paid out of the closing costs of the franchise fee.

Make a Decision

It is hard to know for sure that you are making the very best decision, so instead, make your best decision. Contact a franchise lawyer, accountant, along with other experienced advisors. Look at your market and be careful to not overcrowd it. You may also have the option to take over an existing franchise. After all the pertinent information has been gathered, look at the companies objectively and make your decision. Sometimes the longer you spend trying to decide the harder it becomes.

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Article Tags: business plan, franchise, indolence, new business, objective, sake



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: Info for would be franchisers... - [quote="Sebastien":2gam0klq][quote="BuzzAroundBooks":2gam0klq]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to.[/quote:2gam0klq][/quote:2gam0klq] That is really what I look for in any industry publication. We lead busy lives and when people fill their magazines with fluff, not only does it benefit no one, but it makes us truly appreciate those that don't. Thanks!


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