Opening your own business is a tempting proposition. Whether you want to become your own boss and fulfill your business aspirations or just spend more time with family and friends, a franchise offers a wide array of lucrative options. As you explore the possibility of owning a franchise business, you will realize that there’s an array of applicable questions that you must answer in order to make an informed decision and properly evaluate a business opportunity. To guide aspiring business owners through the franchise opportunity process, here are some of the most frequently asked questions about franchise for sale that can help you set sail in the right direction.
When researching franchises for sale, one of the primary questions that many prospective buyers seek to answer is what is a franchise and how does it work? In a nutshell, franchising is an arrangement formed between a franchisor and a franchisee wherein a franchisee agrees to use the franchisor’s operating system, sell goods and services under the franchisor’s brand name and pay all associated expenses. The franchisor, in turn, agrees to support the franchisee with ongoing training, advertising, promotions and business advice.
Financial considerations are always top of mind with prospective buyers. To ensure an informed decision and a sound investment, most buyers inquire about the initial and ongoing expenses that come with owning a franchise. Investing in a franchise opportunity entails both one-time (startup) and ongoing costs, such as franchise fees, royalties, supplies, marketing, rental costs, legal and accounting services, and insurance. Buyers should take all of these factors into account before making an informed purchasing decision.
In addition to understanding the financial costs associated with a franchise, franchise buyers should also evaluate the franchise’s market potential. When considering a franchise for sale, buyers may want to start by conducting a market analysis to understand the size and scope of the local market, to determine if the particular industry is fertile for expansion and to develop detailed projections for the business. It’s important to build a business model that can generate sufficient cash flow and sales to cover the franchise costs and provide a decent return on the initial investment.
Franchise buyers may also pose questions about the franchisor and their team. The franchise’s leaders, reps in the marketplace, key successes, accreditations and awards should be considered before making a purchase. Conducting research, reading reviews and visiting the franchise office can all help provide insights on the franchise’s leadership team.
After an in-depth inquiry, buyers may look to solidify their investment by executing a legally binding franchise agreement. A franchise agreement outlines all factors that are relevant to the relationship between the two parties, such as payment terms, related obligations, effective duration, terms for renewal or transfer, rights and restrictions, confidentiality and dispute resolution. Aspiring franchise owners should look to have a trusted lawyer review the agreement to ensure that all legal needs and requirements are met correctly.
Taking the plunge into franchising can be a daunting experience for aspiring entrepreneurs. However, with thoughtful research, careful consideration of all relevant factors and the right resources at hand, purchasing a franchise business can be immensely rewarding. When researching a franchise for sale, the International Franchise Professionals Group (IFPG) can provide franchisee consulting services to provide support and assistance to aspiring franchise owners.