Are you tired of the corporate career and feeling unfulfilled? Are you ready to transition into business ownership by buying a franchise? Investing in a franchise can be one of the most rewarding business decisions, but it does come with its own challenges and considerations. With so much on the line, it is important to do your due diligence and be armed with the right information. Below, our experts at International Franchise Professionals Group (IFPG) provide answers to some frequently asked questions on how to buy a franchise.
What is a Franchise?
A franchise is an agreement between two parties that gives the franchiser (i.e. the person selling or “renting” the business) the right to market and distribute a product or service, while allowing the franchisee (i.e. the new business owner) to use the brand, trademark, and all related property. This arrangement gives the franchiser access to a wide market, and also gives the franchisee the opportunity to start and manage their own business without risking too much upfront capital in terms of overhead and advertising costs.
What are some Factors to Consider When Buying a Franchise?
When buying a franchise, there are a number of factors to consider:
• The reputation of the franchiser: It is important to choose a franchiser with a good track record in franchising. Visit the franchiser’s website and research reviews to assess the level of experience and support that they provide.
• Assess the customer base: It is important to research and become familiar with the market for the service or product the franchise provides. Consider the demographics in the region you would be servicing, the price point of the products or services, and the competition that you may be facing.
• Cost analysis: Research all of the fee structures and costs associated with the franchise. Make sure to have a complete understanding of all the initial investments, starting costs, ongoing costs, loans, and other potential hidden costs and fees.
What Types of Franchises are Available?
There are many different types of franchises available, from retail to food services. Some examples of franchises include restaurants, retail stores, auto dealerships, hotels, and beauty salons. Some franchisees offer a single service, while others offer a series of services. It is important to choose a franchise that aligns with your own interests and experiences.
Where Can I Find Available Franchises?
Franchises can be found online, through franchising trade shows, or through franchise consultants and brokerages. Working with a franchise professional can help you narrow down your search and simplify the process.
How Do I Know if a Franchise is Right for Me?
Purchasing a franchise is an important decision and it is important that you are fully committed to the business before you make the investment. Properly researching and planning out a franchise will help ensure that you know what to expect and are prepared to make rational and informed decisions.
Realistic expectations of profits, timelines, and challenges should all be established and clearly outlined. It is also important to be aware of the team members that will be assisting with operations and the level of support that is offered by the franchiser.
It is also important to study and assess existing terms of the franchise agreement, such as restrictions on franchiser transfers and royalties to be paid to the franchiser.
What Other Questions Should I Ask Before Making a Final Decision?
When considering a franchise, make sure to ask:
• What kind of ongoing training and support is included in the franchise?
• Can I get references from other franchisees?
• Does the franchiser have a good reputation in the industry?
• What are the obligations of the franchisee?
• Does the franchiser offer additional services or products after purchase?
• What kind of marketing and advertising support is provided?
• How strong is the product or service presence in the marketplace?
• Are there exit provisions built into the contract?
• How long is the agreement valid for?
The decision to own a franchise should not be taken lightly. It is important to make sure you are educated and informed on all aspects of the franchise and what it entails in order to be successful.
At the International Franchise Professionals Group (IFPG), our mission is to help aspiring business owners make educated and informed decisions when selecting the right franchise opportunity. With the help of an experienced franchise professional, anyone can become a successful franchise owner.