It’s no secret that the brave entrepreneurs who take the plunge into franchising often have big dreams of running a successful business and spending more time with their family. Becoming a business owner is a big step, and it’s important to consider all aspects of the investment process in order to make an informed decision. To help make this process easier, we’ve compiled a list of frequently asked questions about investing in a franchise and answers from members of the International Franchise Professionals Group (IFPG).
What Type of Investment is Necessary to Open a Franchise?
The amount of money required to open a franchise varies greatly, depending on the type of business, location, and number of employees. Generally speaking, you should expect to make an upfront investment of at least tens of thousands of dollars in order to open a franchise. This will cover the initial franchise fee and any necessary equipment or inventory. You may also need to account for the cost of additional employees and all other associated costs.
Can I Get Financial Assistance to Open a Franchise?
Yes, a variety of loan options are available to help fund the purchase of a franchise business. Small Business Administration (SBA) loans, personal loans from banks, and asset-based loans are just a few of the loan options you can explore in the United States. Be sure to consult with a financial advisor to find the option that is best for your particular situation.
Are There Laws in Place that Protect Franchisees?
Yes, there are laws that protect franchisees in the United States. The Federal Trade Commission and each state’s franchise disclosure laws govern the sale of franchises in the United States. As a franchisee, you should be given a document called the Franchise Disclosure Document (FDD) which outlines all the information you need to know about the franchise before you open your business.
What Should I Look for in a Franchise Agreement?
When reviewing a franchise agreement, it’s important to look out for several key terms. These include the total franchise fee and any ongoing fees, the length of the franchise agreement, the scope of the franchisor’s rights and duties, the franchisor’s transfer policies, and the renewal process. Be sure to review the franchise agreement thoroughly and have an attorney review it before you sign.
Are Their Benefits to Joining a Franchise Network?
Yes, there are a variety of benefits to joining a franchise network. These can include access to exclusive resources, shared know-how, helpful advice, and ongoing support. Joining a franchise network also increases the visibility of your business and can lead to greater brand recognition.
What Are the Benefits of Working With a Franchise Broker?
Working with a franchise broker can be an invaluable asset during the franchise-buying process. A franchise broker can help you identify and select the right franchise, provide guidance and assistance throughout the process, and negotiate favorable terms with potential franchisors. Additionally, franchise brokers can use their expertise to make sure you are in compliance with all franchise laws, and can provide ongoing support throughout your franchising career.