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Are You Ready to Start a Franchise?

Written by: Michael Hemenway

Article Overview: Joining the franchise industry requires much thought and research for both the franchisor and the franchisee. A competent franchise consultant from a reputed consultation website can make their job easier.

Are You Ready to Start a Franchise?

Entering the franchise business is a momentous decision for both the franchisor and the franchisee. It’s necessary that you judge yourself (and your business) very well before offering franchise business for sale. Similarly, due diligence is necessary before starting a franchise. Below are some pointers to help you understand whether you are ready to join the franchise business:

If you are a franchisor

The first thing you need to understand about franchising is that it’s a totally different business format. Whatever rules and formulas you have been using till now may or may not have the same effects in the franchising world. You are required to start from the beginning when you wish to offer franchise business for sale. Here, you have to check out first how adaptable your business model is. Your franchisees must easily duplicate your formula of work in their environment for the franchise system to work. Hence, you must test your business model in a prototype location before entering the franchise world. Then you will also need a new team of workers to oversee your franchise business. Moreover, you will also require enough money to maintain them. So, make sure you can afford this time and money for the new business without hampering your original business. If all these fall into place, then you are ready to franchise.

If you are a franchisee

The job stress and disillusion with corporate America may lead anyone to think about starting a franchise. But the decision to join should not be spontaneous; if you are truly interested, you must research various areas before signing any franchise agreement. The first thing you are supposed to investigate is your reason for joining the franchise industry. Then you should know how much money you can invest. Don’t forget to ask the lending institutes about their loan terms. Also, ask your family members and friends to find an investor or a partner. Lastly, make sure whether your family is ready to support your decision of starting a franchise.

Conclusion

Whichever side of the business you represent, it will be better if you go for the expert franchise consultants. For a franchisor looking forward to learn how to franchise a business, the consultants are the best source. They will show the franchisors the defects (if there’s any) of their business model and also help in writing the UFOC and getting required licenses. For a franchisee, the franchise consultants will pair them with the perfect franchisor and help them in selecting site, getting finance and other associated things.

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Article Tags: business for sale, business format, business model, corporate america, disillusion, due diligence, enough money, franchise agreement, franchise business, franchise industry, franchise system, franchise world, franchisee, franchisees, franchisor, loan terms, momentous decision, new business, pointers, 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: 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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