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Is Buying into a Franchise right for you

Written by: Ian Macleod

Article Overview: Going into business by yourself can be a risky venture which is why buying into a proven franchise is often more successful and an easier option. This article explains the benefits of a franchise over going it alone in your own business.

Is Buying into a Franchise right for you

IS FRANCHISING RIGHT FOR ME?

4 Questions you need to ask before you decide to buy a franchise.

A lot of would-be entrepreneurs spend a lot of time and effort researching what business they want to start. In their search, many consider buying into a franchise. The benefits of franchising can be significant, so even if you aren’t interested in opening a franchise, you should at least take some time to consider it. We’ve come up with a list of questions you need to ask yourself before you decide to take the plunge and buy into a franchise.

1. Are you ready to plan everything down to the last detail? A new, independent business that’s started from the ground up is often the first thing entrepreneurs look at when they want to be their own boss. The very idea of starting a business can be daunting, especially once you do a little research and learn all the varied tasks and responsibilities you’ll have to take on. However, when an entrepreneur buys into a franchise, the vast majority of that work has already been done. Finding a product to sell, establishing your name in the marketplace, securing your supply chain, all of it is already done. For a would-be business owner, this fact alone is often enough for them to start looking seriously at franchises.

2. How much are you willing to risk? Whenever a would-be entrepreneur faces the beginning of their first business enterprise, they can often overwhelmed by the complexities. The planning, financing, marketing, accounting and all the other activities a new business owner has to do is tremendous. Is it any wonder then that the failure rate of new, independent businesses is about 75%? However, when a new business owner decides to start a franchise, that number is flipped on it’s head. Franchises succeed 75% of the time. Having a known product, an already established market and a pre-existing organizational structure backing you up is a tremendous asset, especially for individuals new to business ownership.

3. How sure are you of your product’s or service’s viability? Starting an independent business requires a lot of time and effort. One of the main reasons for this is the time it takes to establish your business and build name recognition and a solid customer base. Even if your product or service is in high-demand, people are much more cautious going to a new business than they are visiting an established one. That’s where a franchise

4. Will anyone be there to help you? Independent business owners are usually exactly that: independent. They go it alone, usually with little more than a family member, partner or cheering section to back them up. When times get tough, an independent business owner has only themselves to rely upon, but a franchise owner has a whole lot more. Not only does the franchise owner begin with established products, markets and customer, but they also have the benefit of the entire franchise structure behind them. The franchiser (the company that sold you the franchise) will already have all the training and procedures worked out before you even start. And when you get into trouble, help is often just a phone-call away. This is one of the primary reasons the franchise model works so well, because all that support allows new franchise buyers to sleep a lot better at night.

Related Articles
  Buying A Franchise
  Franchising with all its Success
  Reselling Your Franchise
  Things to Watch Out for When Buying a Franchise
  Why Use a Franchise Consultant?

Article Tags: accounting, boss, business enterprise, business owner, business ownership, complexities, entrepreneur, failure rate, franchise, franchises, independent business, independent businesses, last detail, marketing, marketplace, new business, organizational structure, plunge, supply chain



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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