Are you and your partner recently married and looking to buy a franchise business together? Becoming a franchisee is a life-changing achievement. The experience combines personal freedom with a potential for financial gain, and can be an ideal opportunity to build a life and financial freedom together. With this post, we aim to answer some of the most frequently asked questions potential and current franchise owners have about the process of buying a franchise and its associated costs.
Investing in a franchise is a big decision, and getting it right is of immense importance. To make this planning easy, the International Franchise Professionals Group (IFPG) has compiled a list of the most frequent questions (FAQ) that franchisors, franchise consultants, and vendors ask when dealing with the buying process of a franchise business.
The first step to begin your journey of acquiring a franchise business is to understand the concept of franchising. In layman’s terms, franchising is a business model in which established companies (franchisors) allow independent entrepreneurs (franchisees) to use their brand and model of doing business. The franchisee pays a fee and receives support from the franchisor in return. The franchisor provides training, support, and resources so the franchisee can become successful. The franchisee typically receives advertising support, protected territory, and a ready-made business model in return.
How Do I Buy a Franchise?
The first step in the process of buying a franchise is finding and evaluating potential franchise options. It is important to take your time and do your research in order to make an informed decision. You should carefully evaluate each franchise opportunity and consider your own goals and aspirations. Consider questions like:
• What type of franchise do I have an interest in?
• Do I have the necessary capital to invest?
• How much time and effort do I have to devote?
• Can I partner with someone to share the investment and work effort?
Once you have narrowed down your list of suggested franchises, the next step is to contact the franchisor to obtain more information. This is the best time to ask questions and make sure the franchisor is confident in their ability to assist you in the franchise buying process. You may also find it helpful to visit existing franchise locations, meet the franchisee, and learn more about the experience.
Once you have decided on a franchisor and have had all your questions answered, the next step is to fill out a licensing application. The franchisor will use this to review you as a potential franchisee. The application will help provide the franchisor with details such as your experience in the business, financial investments, and/or background.
After you submit your application, the franchisor will review it and contact you if they accept you as a franchisee. Once accepted, you will sign a franchise agreement and pay the initial franchise fee (which usually includes the cost of training and/or the cost of marketing material). Once all terms and fees have been agreed to and paid, the franchisee can start doing business as a franchisee.
What Are the Typical Costs of Buying a Franchise?
The costs of buying a franchise vary by franchise, and should be discussed with the franchisor and franchise broker group members. In general, the costs of buying a franchise include:
• The initial franchise fee
• Legal fees
• Leasing/renting costs
• Equipment, furniture and fixtures
• Travel expenses
• Professional fees such as accountants and lawyers
Some franchises provide financing and other financing options may be available. These options should be discussed early on in the franchise buying process to ensure you have the best options available.
What Are the Benefits of Becoming a Franchisee?
When buying a franchise, there are a number of potential benefits to consider. These include:
• Reduced Risk. Franchises come with an established business model that has been designed with proven marketing and operational strategies. This can reduce the risk associated with starting your own business.
• Brand Recognition. Most franchisors offer a well-known brand with an established customer base. When these customers recognize your business as part of that brand, they’re more likely to become customers.
• Support. When franchising with a reputable company, you can expect support from the franchisor in maximizing the potential of your business. This includes marketing, training, and ongoing operational support.
• Financial Assistance. Some franchisors also offer financial assistance, providing the opportunity to finance the start-up costs of buying a franchise.
What Are the Long-term Goals of Investing in a Franchise Business?
Owning and operating a successful franchise business can provide you with countless long-term benefits. It can be an ideal way to build a life and achieve financial freedom. When properly managed, the franchising process allows you to focus solely on the important aspects of managing and growing the business, while the franchisor provides the necessary training, support, and operational assistance.
Additionally, franchisors typically provide ongoing support through things like marketing support, local events, and conferences. Franchising can also be an opportunity for you and your partner to share the workload and create financial security together.