Are you feeling overwhelmed looking into entrepreneurship opportunities? Taking the plunge and investing in a franchise can be a huge decision, but the right research can make the process much easier. Here we’ll give you the answers to some of the most frequent questions buyers have about franchising.
The International Franchise Professionals Group (IFPG) is a membership-based franchise consulting network with more than 1,300 franchisors, franchise consultants and vendor members. Our purpose-driven mission is based on integrity, ethics and collaboration ‒ offering a transparent guide to buyers ready to invest in the right franchise for them.
FAQs on Franchising
What is the Difference Between a Franchisee and a Franchise Owner?
A franchise agreement is a contract between the franchisor (the entity that owns the rights to a trademarked product or business model) and the franchisee (the entity that pays for the right to operate a particular franchise). Franchisees acquire the right to use the franchisor’s business model in exchange for a fee or ongoing royalty payments. Franchise owners, who often own multiple franchises, typically need to provide more capital.
What is the Cost of an Average Franchise?
The cost of a franchise can vary greatly depending on many factors, such as the franchise size and which industry you invest in. Smaller franchises can cost anywhere from as little as $10,000 to upwards of $1 million or more. Although the initial cost of a franchise is significant, a knowledgeable franchise broker can help you evaluate your options to identify the right franchise for you and your budget.
What Fees Must an Investor Pay for a Franchise?
The main financial obligations of a franchisee include a franchise fee, ongoing royalty payments, other ongoing fees, and of course the cost of buying the required equipment, leasing a location, and hiring the necessary staff. The franchise fee is usually paid up-front when signing the franchise agreement, and typically ranges from $10,000 to $50,000. Royalties vary greatly, depending on the franchise type, and can range from 1% to 10% or more of gross sales.
What Are the Different Franchising Options?
When it comes to franchises, there’s no one-size-fits-all approach. Different franchise industries, sizes, and types have different requirements and cost structures. Franchises can range from small businesses that provide a person-to-person service, such as hair salons or restaurants, to large, nationally recognized brands.
What is the Best Advice When Considering Franchising?
Everyone is different and so is every franchise. When considering a franchise, it is important to find the right fit for you and your business. Look for a business model that appeals to your unique skills and interests; seek out a franchisor that offers the training, support, and resources that you need; and select a franchise with a business model that will allow you to grow within the industry. An experienced franchise broker can help you navigate the process of selecting the right franchise for you.
The decision to purchase a franchise should not be taken lightly. The process takes time and requires careful consideration and a considerable amount of research. By understanding what to look for and asking the right questions, buyers can ensure that they are selecting the best possible franchise for their needs.