As a stay-at-home parent looking to re-enter the workforce on your own terms, franchising can provide an especially attractive option. In franchising, you purchase the rights to use the established trademark, business operations, methodology, and other standards set by the existing business. This allows you to become your own boss by opening your own business without inventing a totally new business concept.
Whether you want to become a popular franchisor, franchise consultant, or vendor through our International Franchise Professionals Group (IFPG) or other networks, below are some of the frequently asked questions about buying a franchise business.
What is franchising?
Franchising is similar to leasing a business, but with franchising you get the flexibility of starting your own business without inventing a totally new business concept. Franchisees pay a fee and ongoing royalties in exchange for the right to use the established trademark, business operations methodology, and other standards set by the franchisor. The franchisor in turn provides the up-front and ongoing training, procedures, and marketing support to ensure that the franchisee’s business runs smooth and profitable.
How do I find the right franchise for me?
Finding the right franchise opportunity is a multi-step process. Start by listing your business goals and research potential franchises that fit your goals and interests. Next, thoroughly evaluate each franchise to make sure it matches your personality, values, skills, and financial capabilities. It’s also important to get to know the franchisor. Ask them plenty of questions and seek franchisees who are currently running franchises of interest. Doing this research ahead of time will help ensure that you’re making a sound financial decision.
What should I look for in a franchise disclosure document?
The franchise disclosure document (or FDD) contains all of the information you need to make an informed decision on a franchise before signing a binding agreement. This includes historical performance information, annual and monthly costs, financial and litigation history, and more. Read the document in its entirety and discuss any questions or concerns you have with the franchisor.
How much money do I need to start a franchise?
The total startup cost of a franchise varies greatly and depends on the franchise you select. In general, franchises cost anywhere from $10,000 to $500,000 or more. Make sure you factor in all costs besides the franchise fee: equipment, insurance, permits, licenses, etc. Additionally, you may be required to come up with additional funds for working capital reserves or for the purposes of building out the store.
Do I need experience to start a franchise?
Most franchises welcome entrepreneurs regardless of experience level, But some franchisors may require franchisees to have had prior experience in the particular field of the franchise business. Additionally, some franchisors may require that existing franchisees have certain qualifications and experience levels.
What are some of the risks of franchising?
Franchising is not without its risks. Investing in any opportunity requires careful research and due diligence. You will need to consider costs, regulations, market conditions, competition, and other financial risks. Additionally, franchising can be an expensive and a long-term commitment, so make sure you understand the franchisor’s operating costs and the length of the franchise contract before jumping in.
What are the benefits of franchising?
The benefits of franchising are plentiful, but one of the biggest is the level of support available from the franchisor. Many franchisors offer a wide array of training, support, and other resources that entrepreneurs looking to start their own business don’t have access to. These resources can provide franchisors with the edge they need to succeed. Additionally, many franchisors offer opportunities for franchisees to expand their business.
Where should I start my franchise journey?
If you want to get started with franchising, your first step should be connecting with IFPG and our franchise broker partners. We’re more than a franchise consulting network—we’re a team with a passion to help aspiring business owners find the right franchise opportunity.
At the IFPG, we provide comprehensive tools for identifying, selecting, and investing in franchise businesses. Our online database of franchise opportunities and our community of brokers and vendors help guide you through the franchise journey.
Franchising can provide an exceptional opportunity to jumpstart your career as an entrepreneur and help you reach your business goals. With the right support and resources, franchise owners can be successful and experience the rewards of owning their own business.