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The age of franchising is upon us, with more and more individuals looking to find a different career path from the daily grind of the corporate world. Transitioning to owning a business can seem daunting, but with the help of franchise consultants, business owners can be properly guided through the process. The International Franchise Professionals Group (IFPG) is a membership-based franchise consulting network comprised of over 1,300 franchisors, franchise consultants and vendor members that serves as a great resource for aspiring business owners. With the help of IFPG and their innovative programs and training, the process of identifying and investing in franchise businesses has become less daunting.

This article will dive into the most frequently asked questions related to franchises and their corresponding answers, to help aspiring business owners ease the difficulty of transitioning to franchise ownership.

What is a Franchise?

A franchise is essentially an agreement between a franchisor (the entity that currently owns the business) and the franchisee (the individual who will be operating the franchise). Generally speaking, the latter will pay a fee and comply with various operating guidelines set forth by the franchisor such as brand standards and marketing practices. In return, the franchisee receives the benefits associated with running a business, such as the trademarked name, established good will, and marketing resources offered by the franchisor.

How Much Does a Franchise Cost?

The cost of a franchise will depend on various factors, including the franchise’s size, complexity, and the area it is located in. According to the IFPG, the average cost of a franchise starts around $75,000 and usually requires the same amount of capital to provide a “cushion” for the business operations. It is highly recommended to have some capital in reserve for any unexpected expenses.

What Factors Should Be Considered Before Investing in a Franchise?

Before investing in a franchise, it is important to do one’s due diligence to ensure that the business model is the right fit. Consider factors such as the amount of money that needs to be invested, the availability of financing options, the anticipated return on investment, the franchisor’s reputation, and the local market the business will be operating in. It is also important to understand the laws in the state and/or municipality that pertain to franchising prior to making an investment.

Are There Any Alternatives to Franchising?

Franchising is by no means the only option to consider for entrepreneurs looking to own a business. Other options such as starting a business from scratch, purchasing an existing business, or purchasing a “turnkey” business may be worth looking into. Taking the latter route, entrepreneurs can purchase a pre-created business that requires little effort on the part of the buyer and are more likely to have an easier transition to business ownership.

How Much Will it Cost to Start a Franchise?

The cost of starting a franchise depends on various factors, including operational costs, the amount of capital that needs to be invested, and the type of franchise being considered. To start a small business that requires minimal capital, a franchisor may ask for a flat upfront fee of under $50,000. Larger businesses such as restaurants and retail stores that require more capital may carry a total investment cost of between $150,000 to $500,000.

What is the Best Way to Locate a Franchise?

The best way to locate a franchise is to consult with an IFPG member. Franchise consultants typically have access to information about hundreds of franchises, including franchise opportunities that may not be publicized widely. Utilizing the expertise and experience of a franchise consultant would help potential business owners identify a franchising opportunity that best aligns with their skills and interests.

Topics:

Franchises,

Investment,

Startups

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