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Buying a Franchise – The Right Decision?

Guest post by: Mike Derrick

Article Overview: There are thousands of franchise opportunties but buyera must be very selective and perform a high level of due diligence to increase the liklihood of success. This article addresses the advantages of owning a franchise as well as the potential pitfalls of franchise ownership.

Free Download - Sale of a Business By Mike Derrick
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Buying a Franchise – The Right Decision?

The many individuals that have been displaced from the comforts of secure positions within corporate America are on the rise as witnessed by the unemployment rate. And, as most readers are keenly aware, the unemployment rate is actually much higher since the number of permanently unemployed individuals is no longer statistically relevant thus increasing the real rate of unemployment. The many displaced members of society not wishing to remain on the sidelines have few choices; seek employment elsewhere, start a business, buy an existing business, or purchase a franchise.

The latter option, purchasing a franchise, may well offer the best solution for financial security. The ability to utilize 401(k) funds without IRS penalties provides an even greater motive to consider a franchise. While not all franchises meet the standards for the potential franchisee there are a number of franchise characteristics that can be readily identified. Among the features that a solid franchise opportunity should bestow upon the owner will include:

The purchase of a franchise, however, is not the solution for everyone. Franchises present risks that must be addressed. The buyer of a franchise must consider:

In summary, the purchase of a franchise may have some pitfalls, but a savvy buyer will quickly identify these risks and pursue a franchise that:

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Home > Small-Business-Consulting > Mike Derrick > Buying a Franchise The Right Decision >
Article Tags: business broker, business broker dallas, buying a business, buying a franchise, dallas business broker, franchise, franchise ownership, texas business broker
Referred by: http://www.hbgadvisors.com

About the Author: Mike Derrick
RSS for Mike's articles - Visit Mike's website

As a solid advocate and proponent for small to mid-size business owners that desire to formulate an exit strategy I, along with the other members of Huntington Business Group, have been very successful assisting clients achieve their objectives.  Our unique approach that instills trust and confidence with our clients is primarily attributable to the VentureXchange system that Huntington Business Group introduced in 2010.  VentureXchange is a proprietary system that reshapes the typical focus of the business brokerage industry.  The specific focus is upon the business owner. The early phases of this system allow us to quickly get a grasp of the business owner's ultimate objectives (i.e. the sale of the business may only be an intermediate step to his/her real objective).  We also focus upon a number of other factors to ensure a successful transaction.  Savvy buyers look beyond the financial results in order to be certain that risks can be minimized.  VentureXchange was designed to anticipate risks and to alleviate these risks.  Our system quickly positions the seller and his business for an optimal solution.  With more than 20 years of M&A experience in the corporate environment my ability to assist both buyers and sellers in their efforts to fulfill their dreams has been very both successful and rewarding. I specialize in a number of industries, but my experience and that of Scot Cockroft, the owner of Huntington Business Group, allows us to provide the level of professional expertise sought by any business owner. As a graduate of University of Texas at Austin and a long time resident of the state I direct most of my M&A activity within Texas, but many businesses in the bordering states have enjoyed our business acumen for several years.  Our success, as we extend our reach beyond Texas, is the result of the national recognition we have received as evidenced by the #1 ranking Huntington Business Group was awarded for being the most successful business brokerage firm in the VR Network for 2010.  At the same time the Dallas Business Journal recognized Huntington Business Group as 2010's Dealmaker of the Year. These accolades are, of course, very rewarding to our firm, but more importantly, they reflect our commitment to the client.



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Buying a Franchise The Right Decision


Related Forum Posts
Re: Enticing Franchises - Top 9 List 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... 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? 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 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: Subject line Etiquette Re: Subject line Etiquette - [quote="jvprosperity":b50c4a20]Another email rant: Is there some place on the internet that outlines proper "Subject line" headings? There mus be a system out there that people use to be more efficient email senders. Not everything that comes into my mail box requires my immediate attention. I would love to educate myself and the people who send me emails on proper subject lines. Maybe something like: "Urgent Review: <<Title of document>>" "Decision Required: "<<Subject matter>>" just something for me to quickly scan the subject lines and decide which ones need my immediate attention. Anyone know of such email standards that exist out there?[/quote:b50c4a20] The only messages I get that say Urgent or Decision Required etc are spam. I tell people to put something relevant to their business with me in the subject line - this is especially important for the people who fall into my junk mail. Chris


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