Multi-Unit Franchise Experts

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Difference between Franchising and Buying Existing Business

It’s a common mistake to confuse franchising and buying an existing business, but it’s important to recognize the differences between them before deciding which option is best for you. Buying an existing business is the purchase of an entire business that already exists and is up and running. This can be done either through an individual or a broker. With a franchise, you are buying into an established brand with the backing, support, and infrastructure in place. The franchisor will provide you with specific training, operations manuals, marketing strategies, and support that you wouldn’t get if you simply purchased an existing business.

Franchising also offers the benefit of being able to leverage the reputation and existing customer base that the franchisee will be joining. This can often lead to higher profits than if the business was started from scratch. Before investing in either option, it’s important to understand the legal, financial, and operational obligations that come with each.

Frequently Asked Questions about Franchising

For those considering franchising as an option, there are many common questions that are asked. Here is a compilation of the most frequently asked questions about franchising that may help those considering taking the plunge into franchise ownership.

Q: Is Franchising Right For Me?

Deciding whether or not to franchise a business is a very important decision that could have a major impact on a person’s financial future. To decide if this path is right for you, consider the following:

• Do I have the financial resources to invest in a franchise?

• Do I have the entrepreneurial spirit and motivation to succeed?

• What type of business model and industry do I want to be in?

• Am I committed to following the rules and guidelines set by the franchisor?

Answering these questions honestly and evaluating the pros and cons of franchising can help potential franchisees determine if this is a good fit for them.

Q: What are the Benefits of Franchising?

Franchising offers many advantages and benefits for potential business owners. These benefits include:

• Access to a proven business system and brand recognition

• Established system of operations and procedures

• Franchisee support and training from the franchisor

• Ability to diversify income streams

• Increased security of business longevity

In addition to these tangible benefits, franchises also offer the opportunity to achieve a more balanced work life. For those who want to spend more time with their family while working their own business, franchising offers a more secure and reliable way to achieve those goals.

Q: What Areas Should I Research Before Investing in a Franchise?

It’s important to evaluate all facets of a potential franchise before investing. A few key areas to research include:

• The current and projected market outlook

• The franchisor’s background and reputation in the industry

• Reasonable returns on investment

• Ongoing franchisee support

• Where to locate your franchise

• What kind of population will the location serve

It’s also important to speak to existing franchisees to get a better understanding of the day-to-day operations of the franchise and to get their perspective.

Q: What Assistance Will I Receive From The Franchisor?

Franchisors typically provide franchisees with the necessary tools and guidance to help ensure success. This includes comprehensive training, operational support, branding guidelines, and marketing assistance. Franchisees should also receive ongoing support such as business counseling, access to a network of other franchisees, and even event planning services.

Q: What is the Initial Investment?

The initial investment for a franchise varies depending on the industry and size of the franchise. Generally speaking, the upfront investment covers the cost of purchasing the franchise from the franchisor, real estate, legal fees, supplies, and equipment. Many franchisors also require an initial franchise fee which covers their support and services. Depending on the franchise, the upfront costs can range anywhere from $10,000 to $500,000.

Topics: Franchising, Investing, Family Time

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