Franchise - Buy or Not to Buy

Is a franchise right for you?

I have experience in various types of businesses including a few national franchises. Franchising is one that I recommend - in some cases. It 'true that the franchise increases your chances of success, but - it is right for you? There should be a good fit for you and the franchisor because it will be a report. The door swings in both directions.

What is a franchise?

Franchising is a type of license will be given a Franchisee to enable them to have access to some owners of knowledge, procedures, business processes and trademarks in order to allow the franchisee to sell a product or providing a service under the trade name. Usually in exchange for the privilege, you will be required to pay a franchise fee. There may also be ongoing royalties and license fees annually.

Advantages to buying a franchise

Some of the clear advantages to buying a franchise is first of all you have access to an established brand and to have a jump to get to know. The risk of failure is less because other members are working to survive the system and perhaps even prosper in business. The franchisor is required to disclose financial information on the parent company. By law you should receive a franchise offering circular provides information such as legal issues, past and present, the agreement, and a list of existing owners (which it is). Another really good thing is the franchisor is relying on you to succeed and for many reasons. Your success is the success of the franchisor. Because when a franchisor has a history of success that you will be able to sell more franchises and franchising will increase in value. Not only that, but as in many franchises the franchisor make money on sales of products for the franchisee. So it's not going into business for themselves, participate in a win - win situation in many cases.

An indicator for me by the strength of a franchise is when there are more members who own more than one franchise. This shows that kids who are in the business like business.

Moreover, a franchisor usually offer training at corporate headquarters and / or other plant or maybe a store in the function where you can get some training on the job.

There are also other advantages. Look a little 'closer and you'll see some key points that will help you succeed.

Some of the advantages are not so obvious, (A) you have access to other affiliates who may confer with when problems arise or questions. You should also check whether there is an association that helps dealers with franchisee / franchisor relationships and business decisions that affect the franchisee, (B) The training includes teaching techniques that have proven to work, and (C) there are usually advertising cooperatives.

Disadvantages

Like everything else in life there are also disadvantages.

Some disadvantages include the cost of franchising - a range that I can be seen from several thousand dollars to hundreds of thousands. True it affects the marketing brand awareness and business systems that have been tried and proven to work and sometimes extends to the training that you do not cover the cost of getting at the corporate offices for training, accommodation, meals, do not covers the lease of the building, renovation, furniture and fixtures, computers and inventory, and hiring and training employees. And then of course you are unemployed, while all this is happening - the cost of living must be figured in. It is all the additional expenses that must be paid before you get your first paying customer. In addition, there are usually fees franchise in progress, in the form of royalties on gross sales monthly - something about 5% to 15% in some cases. Take a right from the top of the projected cash flow when you sit down to figure it out. If you buy the product is usually a requirement of the franchise agreement that you purchase the product through the parent company, did not you say on who you buy from in many cases (unless there is an association dealer).

With any business there will be a learning curve, it takes into account and do everything possible to 'predict scenarios in your market. Just check out the company, history, time in business and make your own projections, based on new knowledge.

Final Analysis: Do not be sold, of course....