Multi-Unit Franchise Experts

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Franchises: Guide for Career Changers

Are you looking to make a substantial career change? With the rise of franchise opportunities, many are turning to the world of franchising to make their dreams of owning a business a reality. But with more than 3,300 franchise systems available in the US alone, it can be daunting to figure out the right fit for you.

The International Franchise Professionals Group (IFPG) is here to help you navigate the process. As a membership-based franchise consulting network with more than 1,300 members, our goal is to provide our clients with all of the information they need to make a thoughtful and informed decision when investing in a franchise. We want your career change to be a success!

In this guide, we will answer some of the most frequently asked questions about franchises, from understanding franchising basics to how to select a franchise that fits your needs and goals.

What is franchising?

Franchising is a business concept based upon an established brand or company being legally licensed to a new owner or franchisee. Through this agreement, the franchisor grants their franchisee the rights to use the brand’s name, products, services, and operating procedures.

The franchisee then pays a franchising fee and royalties in exchange for the use of the brand, and the franchisee also agrees to follow the franchisor’s rules and regulations for running the business. The key to franchising is the ownership structure; while the franchisee owns the business, it is the franchisor who maintains control of the brand, allowing them to ensure a consistent customer experience from their franchisees.

What types of franchises are there?

Franchises come in all shapes and sizes! While the most commonly known type of franchise is an independently owned business, such as McDonald’s, there are also franchise systems that come with different levels of support.

For example, a franchise system may have dedicated franchises, such as Express Oil Change, where a corporation owns the franchise system and handles most of the daily operations while franchisees can be passive investors. There are also joint venture franchises, such as Supercuts, where the franchisor and franchisee share ownership and profits.

What are the benefits of investing in a franchise?

The primary benefit of investing in a franchise is the low risk associated with joining an already established brand. There are also many tangible and intangible advantages.

Tangible benefits include a recognizable brand name that helps you stand out from the competition, access to an established customer base, and the benefit of buying products and services at a discounted rate. Intangible benefits include the opportunity to be your own boss, join a community of like-minded entrepreneurs, and receive extensive training and support.

What should I look for in a franchise?

Before investing in a franchise, it’s important to do your research. When evaluating potential franchises, look for those that offer the best fit for your individual goals and interests.

Look out for franchisors that offer a comprehensive training program, ongoing support, have a strong track record, a clear business model and processes, and well-known partners and suppliers. Additionally, be sure to read the franchisor’s Franchise Disclosure Document (FDD) and contact former franchisees for an honest assessment of their experience.

What is the best way to finance a franchise?

When it comes to financing a franchise, the cost will vary depending on the franchise system you choose. Franchises generally require between $20,000 and $50,000 in cash to start. Most franchisees use a combination of personal investments, bank loans, and financing from the franchisor.

Investors can also turn to alternative sources of financing, such as crowdfunding, angel investors, and venture capitalists. Many franchisors also offer additional support to startups, such as funding for working capital, building or buying an existing business, or purchasing inventory or equipment.

What should I know before I join a franchise?

Before joining a franchise, be sure to do your due diligence and ask the right questions. Be sure you understand the legal documents, such as the FDD, as well as any laws and regulations that apply to the franchisor.

Do a financial analysis to ensure that you can break even and turn a profit based on the franchisor’s documents. Set realistic expectations about the various profits and losses associated with the business. Investigate the franchisor’s background and contact other franchisees for an honest assessment of their experience.

Topics: Franchises, Franchise Ownership, Franchise Business, Franchising Basics

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