Have You Answered These 4 Questions About Franchising?

Published on Jan 26, 2016

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Have You Answered These 4 Questions About Franchising?

You’ve been a part of the business world for a significant part of your adult life, but lately, feel less satisfied. A little voice keeps telling you to invest in yourself and start a business by buying a franchise.

As always, you have done your homework and concluded that the best way forward is buying a franchise. Before you begin to narrow your choices and consider what franchise to invest in, you should take a breath and ask yourself the following questions.

Topics of Discussion:

  • Are You Ready to Follow Someone Else’s System?
  • What Drives You and Gets You Excited?
  • Have You Asked the Right Financial Questions?
  • Are You Healthy and Mentally Prepared for Buying a Franchise?
  • Investing in a Franchise of Your Own

1. Franchising is all about partnering with an organization that has a proven business model. They have done the trial-and-error work. They spent years putting together a list of best practices used to operate their business. You must feel comfortable giving up some control and following this system. Running a franchise is not the place to color outside the lines. If you are a pure entrepreneurial spirit, you may feel stifled by following rules.

2. Many people judge a franchise based on the product or service provided. Of course these are important things to think about, but not the most important. What you want to focus on more than any other factor is how you want to spend your time. What types of activities do you want to be involved with each day? Ask yourself what brings out your passion. Factor in what you love about work and choose something that allows you to do those things. Investing in a franchise is a great opportunity to further your individual passions, while at the same time investing in a tried and proven business model.

3. Every franchise has startup costs, and it’s important that you know what those are. These include the franchise fee (one-time entry price that gives you access to the company’s offerings), royalties once opened, costs for real estate, inventory, store setup, attorney’s fees, etc. The key financial topics to think about include total investment needed, operating capital reserves, cash for living expenses, average time to break even, and financing options if needed.

Disclaimer: This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of or want to locate a franchise in one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your state. Franchise offerings are made by Franchise Disclosure Document only.