The lure of financial independence and the freedom to lead your own business can motivate those who have recently retired from a successful career to become a franchise business owner. Though the concept of franchising has been around for centuries, franchising itself has been evolving since the dawn of the modern era. While there are a variety of franchise opportunities available, there are some important questions that need to be answered before taking the plunge into the world of franchising.
The International Franchise Professionals Group (IFPG), a membership-based franchise consulting network, presents the following Frequently Asked Questions (FAQs) to help the recently retired understand the requirements, opportunities, challenges, and rewards associated with franchising.
What is a franchise?
A franchise is a type of business ownership arrangement in which an individual, known as the franchisee, agrees to operate his or her business under the terms of a contractual agreement with the franchisor. The franchisee pays an initial fee and ongoing fees to the franchisor for the right to use the franchisor’s trademark, business model, marketing support, and other benefits. This gives the franchisee the opportunity to leverage their existing business knowhow to quickly reach their goal of financial independence.
Do I need to have an existing business before I become a franchisee?
No. In fact, many franchisees come to franchising with little or no business experience. Most franchisors provide comprehensive training that prepares prospective franchisees to operate their business as efficiently as possible. The franchisor is also often able to offer assistance with leasing/location selection and even obtain financing if necessary.
How much money do I need to become a franchise owner?
The cost of a franchise varies greatly depending on the type of business and the size of the business. Some leading franchises have an initial franchise fee ranging anywhere from $10,000 to $50,000. To this must be added the costs of capital equipment, furnishings, inventory, signage, and advertising costs.
Are there legal considerations for me to take into account before starting a franchise?
Yes. Legal considerations are very important and all franchisees should be sure to review the franchise agreement carefully. The franchise agreement is the legally binding document between the franchisor and franchisee. It outlines the rights and responsibilities of each party and should be reviewed with the help of an experienced franchise attorney.
What if I’m not happy with my franchise after the initial period?
It is very important to carefully evaluate your business choices before investing in a franchise. A good franchise will provide ongoing support to help new franchisees meet their goals and succeed in their business. In the event that the business is not performing as expected, the franchisee can contact the franchisor and discuss their concerns. Most franchisors are willing to work with their franchisees to find solutions and help ensure their continued success.