Buying A FranchiseFranchises Are A Great Way To Get Into Business
Buying a Franchise
A franchise enables you, the investor or franchisee, to operate a business. You pay a franchise fee and you get a format or system developed by the company (franchisor), the right to use the franchisor’s name for a specific number of years and assistance. For example, the franchisor may provide you with help in finding a location for your outlet; initial training and an operating manual; and advice on management, marketing or personnel. The franchisor may provide support through periodic newsletters, a toll-free telephone number, a website or scheduled workshops or seminars.
Owning a franchise comes with defined costs, franchisor controls and contractual obligations. Franchises also often receive preferential treatment when it comes to SBA Loans, because the system is a known entity.
Before you invest in a particular franchise system, think about how much money you have to invest, your abilities and your goals. Be brutally honest.
- How much money do you have to invest?
- How much money can you afford to lose?
- Are you purchasing the franchise alone or with partners?
- Do you need financing? Where will you get it? What’s your credit rating and credit score?
- Do you have savings or additional income to live on until your franchise opens and, you hope, becomes profitable?
- Does the franchise require technical experience or special training or education — for example, auto repair, home and office decorating or tax preparation?
- What special skills can you bring to this business?
- What experience do you have as a business owner or manager?
- Are you comfortable with talking with others and networking?
- What are your reasons for buying a particular franchise?
- Do you need a specific minimum annual income?
- Do you want to work in a particular field?
- Are you interested in retail sales or performing a service?
- How many hours can you work? How many are you willing to work?
- Do you intend to operate the business yourself or hire a manager?
- Will franchise ownership be your main source of income or a supplement to your current income?
- Are you in this for the long term?
- Would you like to own several outlets?
- Are you willing to let the franchisor be your boss?