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Looking at Franchises
| Guest post by: Timur Sultanov |
Article Overview: Buying a franchise can be the right initial business for people who have never run their own business before, but like all business purchases it must be approached with caution and a lot of careful thought. This article will give you a good overview of how to approach choosing a franchise. It is possible to buy a brand-new franchise from the franchisor, or to buy an established one from an existing franchisee who has decided to sell. This article begins by assuming you are setting up a brand-new franchise outlet, and concludes by dealing with buying an established franchise business. Let's deal with the theory first, and then tackle how to check out an individual franchise opportunity to see how good it is in reality.
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Free Download - How to Find and Assess the Business Part 2 By Timur Sultanov |
Looking at Franchises
What is a franchise?
A franchise is a licence offered by an existing well-established business (the 'franchisor') to others (the 'franchisees') to operate a similar business using the franchisor's fully developed business model, often trading under its brand-name in a defined exclusive territory. In return, the franchisee agrees to operate the business
systems imposed by the franchisor and pays an initial fee. Thereafter the franchisee pays commission to the franchisor, usually calculated as a percentage of sales. Many well-known names offer franchises including McDonald's, Benetton, Prontaprint, Body Shop and others.
What are the advantages of buying a franchise?
As a franchisee you are operating under the wing of the franchisor and will usually benefit from:
* Using a fully proven business model.
* Trading as a well-known brand.
* National advertising arranged by the franchisor.
* Comprehensive training.
* Help with initial set-up.
* Ongoing help and support.
Who is suitable to be a franchisee?
Franchisors target people who have a desire to work for themselves but, possibly never having done so before, would feel more comfortable to have a guiding spirit watching over them to reduce the risks.
Although the franchisor is there to train you, provide all the systems, and give you ongoing support, it is down to you whether or not you are successful.
Like all other business ventures, success in a franchise will require a businesslike approach, hard work and commitment. If you are in doubt as to whether you have these qualities, don't go for a franchise just because you think the franchisor can solve all the problems. He can't and he won't.
The other factor to consider with a franchise is this. The success of the franchisor and all the franchisees as a group depends on everyone following the system and maintaining the standards. Therefore, if you become a franchisee you will have to accept that the way you work, what you sell and how you charge will be dictated by the franchisor, with very little discretion for you to make variations. This is totally understandable. Every franchisee would lose out if each McDonald's or Body Shop you went into was different. Indeed, the most successful franchises are
the ones where the franchisor maintains the closest control. After all, their success depends on the customers always knowing exactly what to expect, whichever outlet they happen to visit. However, for the very entrepreneurial franchisee it can become very frustrating not to be able to make changes or diversify without permission, and to be bombarded with directives from head office, so you must be sure that you can work under these conditions before you buy.
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About the Author: Timur Sultanov RSS for Timur's articles - Visit Timur's website Click here to visit Timur's website   Successfully Advertising A Business For Sale How to assess a franchise Buy An Existent Business or Start Up Your Own Business VAT an Overview How to Get a Loan To Buy A Small Business |
Related Forum Posts
franchisebrief.com good clean design
- I actually really like the design - it's clean and not busy. The information is easy to find.
You mentioned you didn't want to monetize from the site thru the use of adwords but what about JV'ing with all or most of the Franchises you are referring people to.
Is that possible in the Franchise industry?
Re: Franchise Support. What is it to you?
- To be honest I have never been a big believer in Franchises.
Which of them did you have the best and worst experience with, when you called in as an "interested buyer"?
Clothing Franchises
- I believe that there are quite a few franchises for larger brands such as Diesel, Lacoste and Bennetton etc... but I am not sure how these contracts work.
In New Zealand, Canada & Switzerland Clothing Franchises are for smaller designer brands & Outdoor clothing -- such as Bivouac, the great Outdoors etc
Ian
Top performing Franchise Loans
- Evan,
There are over 120 Franchises listed by the SBA with 0% Loan Failure from 10-1-00 to 9-30-05 these companies have at leat 10 loans disbursed.
A number of the companies are Hotel/Motel Franchises so I listed them separately.
Since all the ones listed have 0% loan failure I listed them descending by # of loans disbursed.
Top 20 (by # loans Disbursed) 0% SBA Loan Failure (does not include hotels/motels)
1 21425--CULVER'S FROZEN CUSTARD 85
2 66910--PRIMROSE SCHOOL (DAYCARE) 76
3 14467--CARTRIDGE WORLD STORES 54
4 68021--QUIZNO'S SUBS 41
5 06560--AUNTIE ANN'S (SOFT PRETZELS) 40
6 29912--FIREHOUSE SUBS 35
7 31154--FOOT SOLUTIONS 35
8 52707--MEDICAP PHARMACY 35
9 09802--BEN & JERRY'S ICE CREAM 33
10 67759--COMFORT SUITES 33
11 70150--RITTER'S FROZEN CUSTARD 32
12 05650--ARBY'S 31
13 65160--PLATO'S CLOSET 31
14 67417--PUMP IT UP 30
15 69149--REMAX 30
16 71456--SALAD WORKS, INC. 30
17 76282--SONIC DRIVE-IN 27
18 84725--UNION 76 OIL 27
19 17049--CHRISTIAN BROTHERS AUTOMOTIVE 26
20 78950--SUNOCO SERVICE STATION 26
Top 10 0% SBA Loan Failure Hotel/Motels
1 10275--BEST WESTERN INN 104
2 67750--COMFORT INN 98
3 38605--HOLIDAY INN EXPRESS 87
4 36680--HAMPTON INNS 57
5 53165--MICROTEL 33
6 75385--SLEEP INN MOTEL 26
7 04160--AMERIHOST INN 18
8 69134--RED ROOF INN 13
9 17230--CLARION INN & SUITES 11
10 20715--COUNTRY INN 11
New Small Business Topic
- Hello everyone,
I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section?
Here's a list of what we currently have:
Angel Investors
Branding
Bank Loans
Business Coaching
Business Plan
Franchises (New)
Insurance
Legal
Marketing
Public Relations
Sales
Small Biz Loans
Venture Capital
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