Retirement can be a daunting experience for many, providing an opportunity to begin a new avenue of activity. Buying a franchise business is a great option for a recently retired individual who wishes to stay engaged in a profession while leveraging their existing hard-earned skillset. As a part of the International Franchise Professionals Group (IFPG), a network of over 1300 franchisors, franchise consultants, and vendor members, we’re here to assist in guiding aspiring franchisees through the franchise process.
In this article, we answer some of the frequently asked questions of potential franchise business buyers. Included are questions about the franchise process, the current franchising market, and the key components in making a successful purchase.
What are the basics of buying a franchise?
The basics of buying a franchise can be broken down into a few key steps. First, identify a franchise opportunity that works for you. Research franchises in your industry and then look into specific franchise opportunities. It is important to fully understand the franchisor’s system and rules related to the purchase before you commit.
After you have identified a franchise opportunity, investigate the franchise. Ask franchise owners or attend a franchise discovery day. At this point, you should develop a budget to understand the costs associated with the franchise. Once you have gathered all the information and are sure a franchise is the right decision for you, then it is time to move forward. You will likely need financing from a bank, so work out the details of financing and loan amounts.
The last step is executing the franchise agreement. Make sure you understand all of the terms of the agreement and seek legal counsel when appropriate. Once you have finalized the agreement, you’ll be ready to launch your new business.
What should I consider when comparing franchise opportunities?
When comparing franchise opportunities, consider: the cost and fees associated with the investment; the support and training the franchisor provides; the potential for rapid growth or high returns; the location of the franchise, businesses in different markets have different dynamics; the successfulness of other franchisees in the system, do they provide a good example of potential success; scaling potential, how easy will it be to potentially open new locations; and the expertise of the franchisor, do they have a track record of success and do their corporate policies benefit franchisees.
What is the current franchising market?
The current franchising market is growing and there are a variety of franchise opportunities available. According to the International Franchise Association (IFA), the number of franchises in the US has been increasing steadily since 2009 and currently sits at over 760,000. This amount of franchise establishments is a record high.
The Retail industry continues to dominate the franchising sector and accounts for the majority of franchise establishments, workplaces and job figures. Home improvement franchises, Commercial services, Facilities maintenance, and Automotive franchises are also popular. The hospitality and restaurant sectors have seen a surge during the coronavirus pandemic, largely due to the success of delivery services such as Uber Eats, Door Dash, etc.
What key components contribute to a successful purchase?
When making a purchase there are certain key components that contribute to success. First, selecting the right type of business with a sound investment plan should be your main focus. Make sure you are comfortable investing time and effort in the franchise and that it aligns with your long-term goals.
Before signing any agreement, make sure you understand the franchise agreement and how it may change over time. Also, consider the real estate or rental market as the location of the franchise will play an important role in its success.
You should also create a budget that accounts for the initial costs of the franchise, operational costs, taxes, and other fees. Additionally, explore financing options, such as working with a franchisor or bank, for guidance in this area.
Finally, make sure the fees are reasonable for the franchise you have chosen and that you understand the franchisor’s support system. Investing in a franchise is a major decision, so make sure to do your research to ensure its success.
Wrapping up
Buying a franchise business can be a smart decision for someone looking to make a career change or stay engaged in a profession after retirement. There are a variety of franchise opportunities available and familiarizing yourself with the different offerings and understanding the purchasing process is key to making a successful investment. When comparing franchise opportunities, consider the cost of fees, the location, and the potential for growth, and make sure to develop a sound budget. Lastly, make sure the fees are reasonable and understand the franchisor’s support system.
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