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Business Franchises for Aspiring Investors

Planning to make a significant career change by investing in a franchise business? There’s a lot to consider and many questions to be answered before you make a commitment. The International Franchise Professionals Group (IFPG) is here to help. Our franchise broker group members guide aspiring entrepreneurs in the franchise process – from identifying the right business to investing in it. In this article, we curate answers for some of the most frequently asked questions about business franchises, to make your first steps in this process easy.

What do I need to consider before investing in a franchise business?

When starting out on the journey of investing in a franchise business, especially as a career changer, it’s important to answer the following questions:

  • What type of franchise business do I want to invest in? What is the scope of the business’ operation?
  • What focus area should I consider when choosing a franchise?
  • What are the benefits of franchising?
  • What do I need to form a legal entity and protect my personal assets?
  • How do I obtain financing?
  • What is the best way to vet a prospective franchise business?
  • What type of training and support do I need prior to and after opening my franchise location?

Answering these questions correctly requires research and the right assistance. With extensive knowledge and experience, IFPG members can help you make an informed decision about investing in the right franchise business.

What is the scope of the franchise business?

A franchise business is a business in which the owner (franchisor) licenses its trademarks, outputs, and/or technology to another person or company (franchisee) in exchange for fees and royalties. When you sign a franchise agreement, you agree to follow specific operational guidelines for running the business.

The scope of the franchise business depends on the size and type of business you invest in. For a sole proprietorship business, you would be the sole owner and all aspects of the business operations, from managing the business to hiring employees, would be your responsibility. But for a larger business, you may need to collaborate with other owners or partners.

What focus areas should I consider when choosing a franchise business?

The right focus areas for a franchise business depend on your goals, skills and interests as well as the state of the market you operate in. Before you invest in a franchise, it’s important to consider the following key areas:

  • The purpose of the business: The purpose of your business should be clearly discernible and will guide your choice of franchise business. It could be profit- or value-oriented, or driven by specific goals such as social responsibility. Your purpose should be aligned with the target market you’re planning to serve.
  • The target market: Before you settle on a franchise business, research the target market you plan to serve. What are the needs of the consumers? What type of products or services are they looking for? Answering these questions will help you identify and narrow down the right franchise business.
  • The operational strategy: Develop an effective operational strategy that suits your purpose and the market. It should include a comprehensive business plan, marketing strategy, and budget for each location, as well as tasks and duties. Assign roles and responsibilities, as well as resources needed to make your business a success.

What are the benefits of franchising?

Franchising offers numerous advantages. Unlike starting an independent business, it allows you to tap into established brand names, operating systems, and ongoing leader support. You also get to work with an established vendor network with strong relationships already in place. Successful franchising also requires strong business relationships between the franchisees and the franchisors.

Franchising can also be more cost-effective and you don’t have to worry about the costs of building a brand or marketing it. By partnering with an established franchisor in your field, you can maximize your return on investment, while lowering the risks associated with starting an independent business.

How do I obtain financing?

When it comes to financing a franchise business, there are a few options. You can get a business loan from traditional lenders, such as banks or private lenders, or you can opt for crowdfunding or loan platforms. You can also apply for grants from state and federal agencies as well as private foundations. This is a great way to take the pressure off your own resources and acquire the funding needed to start up the business. The IFPG group also offers Franchise Performance Mastermind Groups to help business owners obtain the right support and funds to begin their business journey.

What is the best way to vet a prospective franchise business?

Vetting a franchise business thoroughly is important, as it helps mitigate the risks of investing in an unknown entity. You need to understand the company’s goals and operations, as well as the franchise agreement, to make sure that you’re making an informed investment. It helps to ask the franchisor for references, such as past licensees, and speak to them about their experience. You should also compare the market territory you plan to enter to the ones already in operation. Research the competitors and the potential of the market by studying relevant economic indicators and potential customers.

What type of training and support do I need prior to and after opening my franchise location?

Established franchisors provide comprehensive pre-opening training and support to their franchisees. This includes training on the brand’s operational systems and procedures, as well as marketing, financial, and management support. There’s also ongoing support and assistance on all matters related to the franchise operation. Successful franchisors are also known to offer their franchisees access to professional development resources and customised marketing materials to help them boost their business further.


Franchise Business,

Investing in a Franchise,

Franchise Business Benefits

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