Multi-Unit Franchise Experts

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Franchises: Guidance for Aspiring Entrepreneurs

Are you looking to invest in a franchise business, but unsure of the process or the best next steps? The International Franchise Professionals Group (IFPG) guides aspiring business owners through the process of identifying and investing in franchise businesses and with our membership-based network of 1,300 franchisors, franchise consultants, and vendor members, you can find the necessary resources and answers you are seeking.

Investing in a franchise business is an intimidating but rewarding process and many potential investors have questions about the process, such as what makes a franchise opportunity an attractive investment and how do you even get started. To aid our members and potential franchisees, the IFPG has established this helpful FAQ to guide you through the process and provide the answers you seek.

What is a Franchise?

A franchise is a business model where an entrepreneur buys the right to use the trademarks, trade name, brands, products, procedures, systems, and processes that are owned by a franchisor, allowing the franchisee to open and operate their own business. The franchisee owns the business, but will usually pay royalties or a fee to a parent company or franchisor. The franchisor will also assist the franchisee in becoming established and achieving success.

What Resources Should I Look For When Examining Franchise Opportunities?

When you are preparing to invest in a franchise business, it is important to be informed and stay up-to-date on the latest opportunities so you can make an educated decision. As such, we recommend that potential investors look for resources such as franchisor databases, franchise directories, and rankings. Additionally, it is important to stay informed on the latest industry news and trends.

What Are the Benefits of Investing in a Franchise?

Investing in a franchise offers a number of advantages. One of the biggest benefits is that new business owners have a strong support system from an established franchisor who provides the tools, knowledge, and resources needed to become successful. Franchisors have a vested interest in the success of their franchisees and offer ongoing support to ensure your franchise business succeeds. Additionally, purchasing a franchise offers a unique advantage over traditional business startups, as there is already an established customer base and recognized, trusting brand. Investing in a franchise business also offers the benefit of proven systems and marketing strategies, reducing the amount of trial and error often involved in starting a business from scratch.

What Are the Common Franchise Fees?

Franchise fees can vary by franchisor, but the most common fees are royalty fees, marketing fees, and other operational fees. Royalty fees are a percentage of the revenue that is paid to the franchisor, and they usually ranges between 5% to 8%. The marketing fee is used to promote the franchisor’s brand and is usually a flat fee, usually 1 – 2% of revenue. Other operational fees may include a technology fee or a fee for the use of the franchise’s training materials.

What Other Expenses Should I Be Prepared to Invest?

In addition to franchise fees, there are other investments needed to successfully launch a franchise business. These expenses include the costs of rent, utilities, inventory, raw materials, payroll, and start-up capital. It is important to carefully plan these expenses and understand the risks associated with starting a business. It is also important to know that investments in a franchise business vary by company, industry, region, and other factors, so research is essential.

Can I Operate a Franchise Business Without Having to Leave My Current Job?

In many cases, you can operate a franchise business while keeping your current job. However, it is important to consider whether you will be able to fully commit to your franchise business. If you commit to a full-time franchise, you will likely only be able to keep your current job while in the early start-up period.

What Kind of Exit Strategy Does Franchising Provide?

When investing in a franchise business, it is important to plan a strategic exit strategy. To ensure a successful exit, you must plan for the continuity and future success of your franchise business. Common exit strategies include transferring the ownership or franchising unit to a qualified franchisee, liquidation or sale of assets, or franchisor buy-backs, which allow franchisors to purchase existing franchises for expansion.

What Kind of Support Does the IFPG Provide to Members?

The IFPG provides our members with a range of resources and benefits. Our Franchise Business Review services assist you in finding the right franchise opportunity for you and determining the overall viability and success of a particular business. For Franchisors, our Franchisor Research Reports and Performance Analyses provide our members with up-to-date data and insight on the current franchise industry, and our Franchise Innovation Developments offer insight into the most successful trends in the franchising industry.

Investing in a franchise business involves a considerable amount of risk and research, and business owners must consider all their options before deciding. With our members-only network of 1,300 franchisors, franchise consultants, and vendor members, the IFPG is here to help you make informed decisions and empower you to launch a successful business.

Topics:

Franchise Buying,

Franchise Opportunities,

Franchise Consulting

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