Franchise Buying Tips
- By Web Master
- Published 03/2/2007
- Business
- Unrated
Buying a franchise means spending huge amount of dollars and that does not mean that you will
succeed. The company that you bought the franchise from also matters alot.
Before you decide to spend, its important find out as much details as possible about the company.
Identify the franchise
Many of the franchises comes in a "bundle franchises" such as fast-food restaurants, muffler shops, or even motels with a complete business model already plan out by the main company. The plan out model should cover all from budget controls to hiring guidelines. Car dealerships and gas stations are "Product franchises" usually own by the main company. People who own product franchises gets to control their business.
The Franchise model
An exemple would be the fast-food business. The brand name and products of the franchisor greatly benefit from their association. While for a car wash business, it may not be true.
The offering circular
The Federal Trade Commission requires franchisers to provide prospective franchisees with an offering circular that contains basic facts about the company. Remember to read this document, information about the company's business experience, legal history and most useful is its other franchises are all contain in the document.
Number of franchises own by the organization
Most franchises shows a successful and accomplished business. But be cautious though, you could close down competing with a simil
iar business if other
franchises are located near yours.
Fees for franchising
In 1996, a study by the International Franchise Association showed that about 95 percent of the franchise fees were less than $40,000. However, a franchise affiliated with a blue-chip national chain might just cost you more.
Payment for Royalties
About 3 to 6 percent of each franchise's will be charge by the franchisors. Some companies charge more, while others have flat fees with an ongoing basis.
Amount of money made from franchise
The main company's projections are probably optimistic. Other franchisees are also running them. The offering will tell you how to contact them.
Working with these people
After you bought a franchise, you will go through a long and expensive experience. So its best to cooperative and work well with your new boss. Remember to drop by the company's main office, no matter where its location is. Check with the other franchisees about the experiences they are having with the main company.
Help from the franchisor
Ask the franchisor what can he do to help you. He might be able to select a location for your business, negotiate a lease, advertise and interview prospective employees, get business licenses, finance the franchise fee or equipment cost, or gives you other services.
Legitimate or not
To be sure of the legitimacy of the franchise, check with other franchisees, the Federal Trade Commission and the Better Business Bureau.
Identify the franchise
Many of the franchises comes in a "bundle franchises" such as fast-food restaurants, muffler shops, or even motels with a complete business model already plan out by the main company. The plan out model should cover all from budget controls to hiring guidelines. Car dealerships and gas stations are "Product franchises" usually own by the main company. People who own product franchises gets to control their business.
The Franchise model
An exemple would be the fast-food business. The brand name and products of the franchisor greatly benefit from their association. While for a car wash business, it may not be true.
The offering circular
The Federal Trade Commission requires franchisers to provide prospective franchisees with an offering circular that contains basic facts about the company. Remember to read this document, information about the company's business experience, legal history and most useful is its other franchises are all contain in the document.
Number of franchises own by the organization
Most franchises shows a successful and accomplished business. But be cautious though, you could close down competing with a simil
Fees for franchising
In 1996, a study by the International Franchise Association showed that about 95 percent of the franchise fees were less than $40,000. However, a franchise affiliated with a blue-chip national chain might just cost you more.
Payment for Royalties
About 3 to 6 percent of each franchise's will be charge by the franchisors. Some companies charge more, while others have flat fees with an ongoing basis.
Amount of money made from franchise
The main company's projections are probably optimistic. Other franchisees are also running them. The offering will tell you how to contact them.
Working with these people
After you bought a franchise, you will go through a long and expensive experience. So its best to cooperative and work well with your new boss. Remember to drop by the company's main office, no matter where its location is. Check with the other franchisees about the experiences they are having with the main company.
Help from the franchisor
Ask the franchisor what can he do to help you. He might be able to select a location for your business, negotiate a lease, advertise and interview prospective employees, get business licenses, finance the franchise fee or equipment cost, or gives you other services.
Legitimate or not
To be sure of the legitimacy of the franchise, check with other franchisees, the Federal Trade Commission and the Better Business Bureau.
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Article Series
This article is part 2 of a 2 part series. Other articles in this series are shown below:
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Franchise Buying Tips