Aspiring entrepreneurs often seek out the insights and advice of those who have previously invested in franchises. It can be an intimidating decision and process, but knowing what to expect and what questions to ask can provide a great deal of insight when exploring the world of franchises. The International Franchise Professionals Group (IFPG), a membership-driven franchise consulting network, is in place to help guide and support aspiring business owners as they investigate investing in franchise businesses. Our purpose-driven mission speaks to integrity and ethics, and collaboration is always encouraged. Those investing in a franchise should be aware of the many questions they can ask to ensure they are properly informed as they make their decisions. The following frequently asked questions (FAQs) focus on franchises under the 50k price point.
What Should Franchisees Ask a Franchisor?
When looking into investing in a franchise under 50k, there are some basic yet important questions that should be asked. The franchisor should be able to answer these questions accurately and with ease, as these topics require specific responses. This list provides a few examples of what to be aware of.
• What is the total investment cost for entering the franchise and what does it forecast for growth over the next three years?
• What are the exact responsibilities of both the franchisor and the franchisee?
• Are there any ongoing fees beyond the initial startup cost required?
• How much of a financial return on investment is expected?
• What kind of location is ideal for the franchise and are there any restrictions regarding the geographic area?
• Does the franchise come with built-in customer base or is it the franchisee’s responsibility to cultivate business?
• What sort of brand marketing and advertising support does the franchisor provide?
• Are there any challenges with the product or franchise concept that potential franchisees should be aware of?
Are Franchises Under 50k Profitable?
It is difficult to accurately state whether or not franchises under 50k are considered to be profitable, as there are several components that can influence the success of a franchise. Many franchises under the 50k price point are relatively new to the market and funds may be invested into operational support and expertise. As such, due diligence is key when exploring potential franchise investment opportunities.
This being said, the essential elements that may bring success include an operational plan that outlines measurable growth; a talented team that is aware of competitors in the same market; an effective sales and marketing approach that includes online, print, and web-based strategies; and of course, a positive customer-focused attitude. The best advice when it comes to evaluating a potential franchise is to do research and obtain as much data as possible before jumping in.
Are Franchises Resilient to Economic Disruptions?
The franchise industry has proven to be relatively stable in the face of a challenging economic climate. This is assuring to potential franchisees, as it displays the fortitude of franchising and its ability to remain resilient in the face of economic changes. Franchises such as UPS, McDonald’s, and Ace Hardware have been around for many years and have weathered a number of economic storms with relative success. As the franchise industry continues to grow, new and innovative franchise opportunities are constantly being presented.
It is essential to explore the competitive landscape. Before an aspiring entrepreneur invests in a particular franchise, comparison shopping should be used. Check out the competitive landscape and see how your proposed franchise stacks up in terms of pricing and other parameters. The right franchise can be a great road to financial success and one that is standing tall in the face of economic disruption.
What Should an Aspiring Entrepreneur Have Before Investing in a Franchise?
The most important thing an aspiring entrepreneur should have before investing is a comprehensive understanding of the franchise model. Also, it is important to understand the competitive landscape, the required financial hustle, and a detailed look at the type of investment required to make the venture successful. Furthermore, acquiring an understanding of local regulations; evaluating the perceived market share; creating a plan of attack to penetrate the market; and crafting a strategy for growth, are all key components that should be understood before engaging in a franchise investment.