Are you and your partner considering buying a franchise business to gain more freedom and flexibility? Franchising provides you the opportunity to open a business without reinventing the wheel, and it can be a confidant path to hospitality and success. With a franchise investment, you are buying into the success of a well-known brand and supported by the franchise’s best systems, practices, and guidance.
The International Franchise Professionals Group (IFPG) is a membership-based franchise consultancy with more than 1,300 franchisors, franchise consultants and vendor members. Our franchise broker group provides the necessary support to aspiring entrepreneurs and business owners for identifying and assessing the franchise business investment.
In this article, we’ll discuss the frequently asked questions (FAQs) by investors who are looking forward to starting a franchise business. We’ll cover topics on how to investing in a franchise, how to identify which franchise is best suited for you, diversifying your portfolio with different franchise investments, the cost associated with a franchise investment, and the required daily commitment for the success of a franchise business.
What Is A Franchise?
A franchise is an agreement between a parent company (the franchisor) and a franchise owner (the franchisee). The franchisor grants the franchisee the right to use their business trademarks and to access resources, technology, and operational systems. The franchisee pays royalties, startup fees, and agrees to market standards.
How Can I Identify The Best Franchise For My Investment?
Identifying the best franchise for your investment could be overwhelming. However, the following steps should be taken into consideration:
1. Do your research: Research on the franchise industry for an idea of the options available. Read online reviews, seek advice from franchise brokering groups, and read industry reports. Also, look for any legal or financial issues within the industry.
2. Assess your capacity: Consider your interests, management skills, financial resources, and time commitment. Take some time to analyze what type of business you’re most interested in.
3. Analyze the costs: Understand the costs, fees, and any ongoing payments associated with the franchise. Carefully analyze them to ensure that you don’t take on too much.
4. Seek advice: Consulting with a franchise consultant or a franchise brokering group is a must to ensure that you’re making the right decision.
What Kind Of Commitment Does A Franchise Require?
A franchise business requires significant time commitment and dedication for its success. Depending on the franchise model, you might need to work at the location of the business regularly. For franchisors operating multiple locations, there may be a need to spend lots of time travelling between various locations for troubleshooting. Furthermore, you are also obliged to abide by the standard practices set by the franchisor.
What Are The Benefits Of Investing In A Franchise?
There are many benefits to investing in a franchise. These are some of the key ones:
1. The franchisor’s brand can be used by franchisees to easily attract customers.
2. Franchises provide security and support to franchisees with access to established business operations.
3. Franchise owners enjoy access to extensive resources, technology, and operational systems of the franchisor.
4. Franchises provide additional opportunities for diversification.
5. Franchise owners also benefit from cost savings and economies of scale when purchasing in bulk.
What Should My Portfolio Look Like When Investing In Franchises?
When investing in franchises, it is recommended to diversify your portfolio. Investing in multiple businesses minimizes risks and gives you access to a larger market share. Depending on your goals, you can choose to invest in a single franchise model or opt for multiple franchises in different industries.
Which Franchise Is Best For A Husband And Wife?
While there is no ‘one size fits all’ answer to this question, there are certain programs which have proven to be popular among married couples. Businesses that involve minimal customer interaction such as a home repair services, bookkeeping services, or a janitorial businesses are great options. Franchise businesses that are more labor-intensive and require relatively low capital investment such as lawn care or waste management services are other good possibilities.
Is Investing In A Franchise Worth The Risk?
Investing in a franchise can be a very rewarding investment. With the right expertise and guidance, franchisors have the potential to earn a great return on their investment. As a franchisee, you get access to the franchisor’s proven business model, access to resources, and the benefit of having the franchisor’s expertise when making business decisions.