For those who want to become business owners but also spend time with their loved ones, franchising is a great option. Buying a franchise not only gives one the autonomy and independence of owning a business but also the freedom to take breaks and holidays. With more than 1,300 franchise brokers and members, the International Franchise Professionals Group (IFPG) is the best resource to consult for all your franchising needs.
But often times, aspiring franchise owners fail to take into account the numerous questions one must ask before taking the plunge. Thus, we have listed down some of the most frequently asked questions about franchises to help you get started on your career as a franchise owner. With an understanding of these common queries, you have a better chance of finding the best franchise for you.
What Is a Franchise?
A franchise is a type of business where a company grants another party permission to use its trademarks, logos, and other business elements to sell its products and/or services. In exchange for the right to do so, the party (business owner or franchisee) typically pays an up-front franchise fee as well as ongoing fees, such as royalties. Franchising is a form of business that has been around for decades and is a great way to become your own boss and have the benefits that come with owning your own business.
What’s the Difference Between Franchising and Starting Your Own Business?
The main difference between starting your own business and buying a franchise is that as a franchisee you do not have to create a business from the ground up. Instead, you are provided with an existing business platform and established procedures to follow in order to succeed. As a business owner, you have to create your own platform and put in a lot of time, money, and research into discovering what works.
How Much Money Do I Need to Invest in a Franchise?
The amount of investment needed to start a franchise varies significantly based on the type of business and brand. According to the IFPG’s Franchise Cost Report, most single-unit franchises cost between $28,000 and $1.8 million. Multi-unit franchises on the other hand, tend to be higher in cost and require a higher investment loan.
What Are the Steps for Starting a Franchise?
Starting a franchise requires commitment, research, and planning. Here are the steps that you need to take when starting a franchise:
1. Select the right franchise:Before investing in any franchise, you should do your due diligence and research the different available franchises. To start the selection process, a franchise consultant can help you narrow down the list of potential franchises.
2. Analyze the market:Once you have identified potential franchises, you must analyze their financial and market feasibilities. A good franchise broker will allow you to look at detailed information and conduct research on the market before you make a decision.
3. Choose a location:After researching the market, you must choose the exact location for your franchise. This is not a decision to be taken lightly, since this can have a major impact on your business.
4. Secure financing:Financing is one of the key components to setting up a successful franchise. Depending on your financial situation, you may be required to apply for a loan or secure investors.
5. Contact a lawyer:Before finalizing any documents document it is important to contact a lawyer in order to review and understand the agreement. Additionally, a lawyer can help you understand the different legal aspects of your franchise.
6. Sign the papers:Once you have read through and reviewed the franchise agreement, it is time to sign the papers. This is the final step before you can start your new business.
What Do I Need to Consider Before Buying a Franchise?
Buying a franchise is a major financial and lifestyle decision. When considering any business venture, you should consider the following:
1. Financial feasibility:Analyze if you have the finances to start and sustain the business.
2. Market fit:Research the demand for the product or service in the area you plan to launch the franchise.
3. Legal laws:Understand the different regulations and laws in the area where you’ll be running your franchise.
4. Life style:Think about the potential implications of dedicating the time and dedication needed to run the franchise.
What Support Will I Receive as a Franchise Owner?
When starting a franchise, your franchisor will provide you with a wealth of resources and support. To start off, you can expect to receive the following from your franchisor:
1. Training:Your franchisor should provide you with training to help you understand the policies and procedures of the business.
2. Marketing assistance:Your franchisor likely has a separate marketing arm to ensure your franchise attracts customers.
3. Support from head office:You will be able to call and rely on the head office for support with regards to operations, finances, and other important aspects of your business.
4. Access to industry conferences and mentors:Your franchisor likely has a network of experienced franchisees and mentors that you can connect with.
We hope that this article helped answer some of your questions about franchising and buying a franchise. Before taking the plunge, it is essential to do your research and be sure that you understand all aspects of the franchise. As a member of IFPG, you have access to valuable resources such as our Franchise Cost Report, to help you make the best decision.