Are you considering investing in a franchise business? Are you unsure of where to start or how to go about it? Variety of question come to mind as you weigh the decision to enter the franchise market, but luckily, you’re not alone in your journey. The International Franchise Professionals Group (IFPG) is here to help! Our franchise broker group members comprise of more than 1,300 franchisors, franchise consultants, and vendor members who are dedicated to guiding aspiring business owners in navigating the franchise market and identifying the right fit for their investment.
Whether you want to start a new career as a Franchise Consultant or consider investing in a franchise business as a consulting entrepreneur or vendor member, the IFPG has a variety of resources to help you get started. This article outlines Frequently Asked Questions (FAQs) about how to invest in a franchise business and provides links to other articles and resources to guide you on your journey.
How Can I Access Funds To Start a Franchise Business?
Startup funds can be the biggest hindrance when considering investing in a franchise business. Luckily, there are a variety of resources available today such as traditional loans, crowdfunding, online lenders, and even grants specifically dedicated to entrepreneurs or small businesses.
Traditional bank loans may be your most popular option when it comes to accessing funds, but it’s important to explore and understand the different types of loans and their associated costs and terms.
Crowdfunding is another great way to access funds for your business. With websites such as Kickstarter, GoFundMe, or Patreon, business owners can market and promote their business plan and fundraising goal to potential investors. Donors typically fund a percentage of the campaign and also encourage their network to support it.
Online lenders are also a popular option for small business owners. This type of financing has become increasingly popular due to the convenience, speed, and minimal application requirements. Although the terms and interest rates are higher than traditional bank loans, many businesses are able to access quick capital with this financing option.
If you’re a veteran or have owned a business in the past, check to see if there are any grants available through the Small Business Administration (SBA). For businesses with innovative ideas, there may also be grants available through state or local economic development agencies.
How Do I Get Started Investing in a Franchise Business?
The first step is to understand what type of franchise business is the right fit for you. Take time to do your research, talk to other franchisees, and assess the legal and financial aspects of investing in a franchise before making the decision to invest. Connecting with IFPG’s network of experienced franchisors and brokers can also help you benchmark your progress and answer questions about the industry.
Once you’ve identified the franchise opportunity that’s right for you, it‘s time to develop a business plan. Your business plan should include an executive summary of what you plan to do, your target market, financial projections, as well as how you intend to advertise and market your business.
Once your business plan is complete, you’ll need to research financing options and apply for any needed permits or licenses. After that, you can begin the process of choosing a location for your business and marketing your franchise to potential customers.
What Are Benefits of Investing in a Franchise Business?
Franchising is appealing to many business owners for its low overhead and capital startup costs, and the ability for aspiring entrepreneurs to become part of a successful business model. In addition, franchise agreements provide business owners the opportunity to gain access to expertise and advice from already established and successful franchisors.
In a typical franchise agreement, the franchisor provides the franchisee with everything they need to get their business up and running, such as an established brand name, operational processes, training and coaching, as well as methods for marketing and advertising the business. The franchise agreement also includes financial protection for the franchisee– they are not responsible for any expenses associated with marketing, advertising or other overhead costs, as these are provided by the franchisor.
Franchise businesses have become an increasingly popular way for entrepreneurs to get started in business ownership and develop a successful venture. Although there are certain legal and financial considerations with investing in a franchise, a franchise agreement provides entrepreneurs with many benefits such as a low overhead and startup costs, established and successful brand name, and protection from financial liabilities.
At the International Franchise Professionals Group (IFPG), our franchise broker group members are dedicated to helping aspiring business owners throughout the process of investing in a franchise. We provide extensive resources, support, and continuing education to our members.