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Investing in Franchises - The GoBigNetwork.com

Guest post by: Ilya Bodner

Article Overview: Another way to get into an established business profile is to purchase a franchise. With pros and cons, purchasing a franchise can give you that extra leap needed to start a strong business profile and image.

Investing in Franchises - The GoBigNetwork.com

INVESTING IN FRANCHISES

Another way to get into an established business profile is to purchase a franchise. With pros and cons, purchasing a franchise can give you that extra leap needed to start a strong business profile and image.

Franchising is an agreement between an interested franchisee and the owner of a trademark, brand name or advertising symbol. The franchisee must be prepared to relinquish their individual control or viewpoint of how the business should be run, agreeing to adopt systems, rules and regulations of the franchisor.

"Don't re-invent the wheel" is a common adage in the business world. The franchisor offers a role model of a proven track record of success. This is its greatest drawing point. Nine out of ten franchises reported profit in 2002.

In considering whether to invest in a franchise opportunity, research which type of franchise is most suitable for you and what type of capital investment you are prepared to make. The ten top franchises in 2005 according to Entrepreneur were: Subway, Curves, Quizno's Sub, Jackson Hewitt Tax, UPS Store, Sonic Drive, Jani-King, 7-Eleven, Inc., Dunkin' Donuts and Remax, Inc.

Nearly 400,000 franchises employ more than 9.8 million people, with a payroll of $230 billion. There is a new franchise opening in United States every 8 minutes. Approximately one out of every twelve retail outlets are franchises. As many baby boomers today reach retirement, they, as well as people who have severance packages, are looking to franchises as an investment. Other potential franchisees may be people who are downsizing, or simply dissatisfied with present conditions.

Franchises are turnkey systems of duplication. As an entrepreneur starts up a new business, it is beneficial to have a strong support team and training offered by franchisors. Franchisors often reassure the new franchisee by saying, "You are in business for yourself, but not by yourself. "

High start-up costs of franchises may be some of the primary concerns of getting started. However, financial institutions are more likely to lend money with the backing of franchisors. A successful pattern is for the franchisee to establish the first franchise, and then quickly build a second and third within the same geographical location. They are aided by reduced costs of goods from suppliers due to the volume of sales within the franchises and bulk purchasing results in savings to the franchisees.

Be careful not to confuse the business credit image of the franchisor and yourself. Although it is a great way to get ahead, it isn't nearly comparable to purchasing an existing business. Even though the image is purchased, business credit is still separate and you would essentially start from scratch as if opening a new business. The business stability follows the business entity that is created and, when purchasing a franchise, the business owner is not purchasing a part of that company.

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Article Tags: Ilya Bodner strong business credit



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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"?
Re: Invest in Real Estate or Stocks? - I want to reiterate what Barb said, be prepared for the long run. Investing in stocks and real estate myself, I highly recommend learning as much as you can about both. Find a great mentor in both areas as well if you can. But always, always, remember that you buy both and WAIT. There's no flipping around or you can lose alot! Jude
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


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