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Seven Questions to Ask when Starting a Franchise

Written by: Doug Schadle

Article Overview: Buying the rights to a franchise is an exciting and nerve racking process. It isn't everyday that you decide to uproot the life that you currently know and are accustomed to and start your own business. When you are thinking about buying into a franchise business, first ask yourself these seven questions that will help you make an informed and strategic decision.

Seven Questions to Ask when Starting a Franchise

Buying the rights to a franchise is an exciting and nerve racking process. It isn't everyday that you decide to uproot the life that you currently know and are accustomed to and start your own business. When you are thinking about buying into a franchise business, first ask yourself these questions that will help you make an informed and strategic decision:

1. What do you love doing? - This is the most important question to ask yourself. You need to get involved with a franchise that will allow you to do the things you love or you will not enjoy your new career move. Enjoying yourself means you will work harder and grow your business at a higher rate.

2. How much does the franchise cost? - Make sure you research how much the buy-in is, how much land property will cost, what your overhead will be and all the other franchise fees you will have to pay.

3. How much do you have to invest? - You may see several franchises that you would like to invest in, but if they are way over your available budget to invest, you have to know when to back away. There are plenty of franchises out there and it doesn't make any sense to start out your business by investing more than you'll be able to pay back.

4. What are the profit chances? - Is the business recession resistant? If not, you could end up failing quickly and be out a lot of time and money. Make sure the business has the chance to be profitable.

5. What does the market look like for the franchise? - This question goes along with the profit chances of the business. If you are opening a business in a market that is saturated with or not looking for the service you want to offer, your business will fail.

6. How established is the franchise? - Make sure the franchise has a good system in place to help you along your journey in the franchise industry. Remember, you can be in business for yourself, but not by yourself.

7. Have you done your research? - Check out the history of the franchise and the number of franchises around the country. Call some of the franchisees and talk to them about their experience with the franchise. This is the best first-hand account you'll be able to get, so you need to take advantage.

Related Articles
  Questions to Ask Before Buying a Franchise
  Looking for Franchise Finance? You May Be Sitting On It Already
  Franchising Continues To be a Safe Way to Go in Troubled Economy
  The Advantages of Owning a Franchise
  Are You Ready to Start a Franchise?

Article Tags: budget, career move, franchise business, franchise fees, franchise industry, franchises, journey, opening a business, own business, recession, time and money



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: Moderators on vacation - Hi Everyone, I will be away for the next 4 days. Starting now.


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