Multi-Unit Franchise Experts

A newly-signed franchisee standing in her new bakery franchise

Investing in a Franchise

For those looking to own and invest in their own business, franchising may be a great opportunity. Franchising offers you the support of an established business entity as well as the chance to be your own boss. Starting the process of investing in a franchise may seem daunting, but it doesn’t have to be.

The International Franchise Professionals Group (IFPG) is an association that seeks to bring together franchisors, franchise consultants, and other vendor members to help aspiring entrepreneurs evaluate the right franchise opportunity for them. We understand the questions and apprehensions that come along with making such an important investment. We are here to help make the process of researching and investing in a franchise as stress-free and successful as possible.

Below are some commonly asked questions about investing in a franchise to help get you started on your journey to franchising.

What is franchising?

Franchising is a business approach in which business owners (franchisors) license the right to use their brand name and business model to other entrepreneurs (franchisees) who own outlets and operate them. Investors receive the benefit of owning their own business with the protective covering of an established business. The franchisor provides the budget, marketing material, training, business systems, and support services. In return, the franchisee pays a start-up fee or royalties.

How much does it cost to start a franchise?

The cost of starting a franchise can vary depending on the type of business, the market, and the level of support needed. Generally, investors can expect to pay between $50,000 and $200,000. The cost of franchising can include a franchise fee, application fee, royalty fees, advertising fees, and other start-up costs.

What type of support do I get as a franchisee?

When you invest in a franchise, you’ll receive the support that all franchises offer which includes access to driver resources, comprehensive training, and ongoing operational support. Depending on the franchise, you may also get access to materials and systems, like templates, software, and scheduling tools.

What’s the difference between a franchise and a business opportunity?

A franchise is a business that is purchased from an established company. Generally, a franchise has an established track record, and the investor receives the rights and resources to operate the business according to predetermined standards. The investor is required to pay a upfront fee and to sign a contract agreeing to the terms and conditions of the business.

A business opportunity is a plan or agreement that offers you the possibility to start a business with the assistance of the seller or promoter. Business opportunities are not established companies, nor do they have corporate support or ongoing training and resources.

What should I consider before investing in a franchise?

Before you invest in a franchise, you should do your due diligence and research the franchisor and the industry. Ask questions about their track record, success stories, and customer service. Consider the markets and industries that are currently trending. Evaluate the level of investments needed and make sure your financial resources are up to meeting those demands.

Are there any tax benefits associated with owning a franchise?

Yes, depending on your type of business and the total investment you’ve made in the business, you may be eligible for certain tax benefits. These can include deductions from start-up costs, home office deductions, and other allowances. Consult with an accountant or tax professional to determine your eligibility.

How long does it take to open a franchise?

The time it takes to open a franchise varies from business to business. The process of purchasing a franchise and opening the business generally takes six to nine months, depending on the industry and the amount of work needed to get the business up and running.

The bottomline

Investing in a franchise is a great way for aspiring entrepreneurs to become their own boss. With the right support and guidance, you can confidently take the plunge into franchising and maximize the returns on your investment.



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