5 Tips for Finding the Right Franchise
Contributed by Guidant Financial Group.
So you’ve decided that a franchise is the right path for you? Now comes the exciting part—choosing among hundreds of franchise opportunities. Here are questions to ask yourself to help narrow the field:
1. What captures your interest?
If you’ve always been a gear head, maybe a Jiffy- Lube or Snap-on Tools franchise would be right for you. If you love to travel, it may thrill you to help others with a cruise planning franchise or similar travel-based brand. On the flip side, no matter how great the ROI is, if fast-food makes you queasy, you probably won’t be happy being a burger-and-fries franchisee.
2. Do you want to run a business from home?
Home-based franchises have relatively low start-up costs. Some of the most successful are in the commercial cleaning category (Jan- Pro, System4, and Vanguard are Entrepreneur magazine’s top three home-based franchises for 2013). Tools, lawn care, and travel planning are also great opportunities.
3. Does this product or service have staying power?
Franchises that are hot right now may not be in a decade. Check into recession-proof services (pipes will burst, cars will break down, and people will spend money on their kids and pets no matter what) and franchises that target growing population sectors such as seniors and Latinos.
4. How much do you want to invest?
There are franchise opportunities in nearly every price range from a big- ticket McDonald’s ($1.03M) to home-based, low-startup cost franchises that you can get into for under $10K such as CruiseOne or Jazzercise. Getting a business loan is an option, as is rolling over a retirement account to purchase a franchise. The latter is complex if you want to avoid taxes so it’s best to obtain professional help.
5. Is the franchise a good fit?
When you’ve got your options narrowed to one or two, you’ll want to do some serious homework on the franchisors including talking to current and former franchisees, carefully reading over the Franchise Disclosure Document looking for red flags, hidden fees, and any history of litigation. It may also be prudent to seek the help of a franchise consultant—their services are typically free and they know the industry well.
Once you’ve done your soul-searching about the kind of business you want, narrowed the field, done due diligence on all the details and finally made your decision, take a deep breath and step into your future with confidence.
or visit guidantfinancial.com
How Do You Pay for a Franchise?
Whether you’re purchasing a whopper from Burger King or joining the Burger King franchise system, the old mantra holds true: there’s no such thing as a free lunch. When you first get started running a franchise you need to pay a fee to allow you to enter into that franchise. These fees are the largest fees that you will normally pay a franchisor and typically range between $5,000 and $1,000,000 depending on the franchise. The franchisor charges this fee as a way to recoup the costs of expanding the franchise and to continue to grow. From a franchisee perspective, this is a major outlay and can take a long time to make back, but is a necessary step. Aspiring business owners must understand how much capital is available to them so they can ascertain how much they can afford. The cash you have at your disposal is known as liquidity, and there are numerous ways to increase your liquidity above the balance in your bank account. As a result, many people don’t realize how much capital they actually can use for investments, like launching a franchise branch. We’ll run through some of those methods below.
Trademark Infringement Headlines Offer Franchisors Important Lessons
The Griller franchise prevailed in its trademark infringement suit against The Original Griller. This was due, in part, to the fact that The Original Griller’s logo featured the word “Griller” more prominently than the other included words.
The Financially Distressed Franchisee
In dealing with an individual distressed franchisee, the following questions need to be asked: