As businesses across the United States grapple with the consequences of lingering COVID-19 pandemic–related economic shutdowns, many corporate workers have experienced layoffs, leaving them to consider investing in or starting a franchise.
At the International Franchise Professionals Group (IFPG), our newly launched Franchise Broker Network has been designed to provide the tools and resources needed to make their franchise dreams a reality. Below, we have gathered a list of Frequently Asked Questions (FAQs) to help prospective owners better understand the process of selecting, negotiating and investing in a franchise brand.
What Is The Process Of Starting A Franchise?
The process of selecting, establishing and opening a franchise business is more involved than many prospective franchisees expect. However, with the right guidance and support, the process of launching your franchise can be enjoyable.
At IFPG, our goal is to ensure that each potential franchisee is empowered to make the best-informed decision possible concerning their new venture. The process of choosing the right franchise opportunity involves a wide range of considerations, including personal goals and interests, regional markets and demographic trends, and financial assessment.
To help prospective franchisees effectively navigate the process of selecting a suitable franchise brand, we offer our comprehensive Franchise Broker Network. This platform provides access to hundreds of potential franchising opportunities, provides customized assessment tools to help evaluate each opportunity, and offers resources such as legal advice, financial guidance, and marketing assessments.
How Does Investing In A Franchise After Layoff Differ From A Regular Franchise Investment?
The process of investing in a franchise after a corporate layoff is not substantially different from the process of franchising normally. As with any business venture, however, the process of researching, assessing and investing in a franchise requires extensive research and detailed planning.
For franchise owners who have recently experienced a layoff, due diligence and caution are especially important. We recommend that those who find themselves in this situation use IFPG’s Franchise Broker Network to evaluate various franchising opportunities, and consult with legal and financial professionals about their short and long-term prospects as a franchise owner.
Additionally, we strongly advise that prospective franchise owners research existing franchise locations in similar markets to get a better sense of the brand’s potential, as well as the expected short-term returns and long-term prospects.
What Are The Key Factors To Consider Before Investing In A Franchise?
Selecting the right franchise opportunity requires real soul-searching – and an honest assessment of your own skillset. Prospective franchisees should ask themselves a range of questions, such as: What are my passions and business acumen? How well can I handle decisions and interactions? What type of culture am I looking for? Are there any markets in which I have a particular advantage?
Carefully analyze your entrepreneurial experience, industry preferences, and skills, and see if they match up with the brand that you are interested in. Once you have conducted the initial assessment, ask yourself further questions about the future of the industry and the potential for the business within the foreseeable future.
Finally, conduct extensive research on the franchisor’s ability to provide vital support services to franchisees and ensure that you have a well-developed plan of action before committing to any investments.
What Is Franchise Financing?
Franchise financing involves the acquisition of capital for the purchase of a franchise business. In some cases, franchisors may offer financing to qualified franchisees. In other cases, aspiring franchise owners must seek financing from outside sources.
At IFPG, we provide comprehensive financial tools to help prospective franchisees evaluate their financing options. These tools allow franchisees to compare and contrast opportunities from select lenders, as well as explore alternative funding options such as SBA loans, home equity lines of credit (HELOCs), commercial real estate loans, angel investments, and more.
What Are The Legal Requirements For Investing In A Franchise?
The primary legal requirement for investing in a franchise is the signing of a Franchise Agreement. This legally binding document lays out all of the obligations and responsibilities of both the Franchisor and the Franchisee. The Franchise Agreement includes the term of the agreement, the services and support that the Franchisor must provide, the establishment of territorial rights, royalty fees, and other pertinent details related to the franchise.
It is important to note that the Franchise Agreement is typically backed up by additional legal documents such as a Franchise Disclosure Document (FDD) which outlines all franchise fees, the sales and marketing methods of the franchisor, and any restrictions or limitations imposed on the franchisees.
At IFPG, we offer access to legal resources to help prospective franchisees understand the details and intricacies of these legally binding documents. We also provide a range of advice and action plans to help franchisees resolve any disputes or disagreements that may arise during the course of their ownership.
As the United States continues to move toward recovery from the economic fallout of the COVID-19 pandemic, more and more corporate workers are making the decision to pursue franchise ownership. For prospective franchisees, the franchising process can be a steady path to financial security.
At IFPG, we are dedicated to helping aspiring business owners realize their goals by offering comprehensive guidance and the tools needed for success. To learn more about our unique approach to franchise consulting and what IFPG can do for you, contact us today.