Minority, Women Entrepreneurs Find More Opportunity in Franchise World
While there are many risks and hurdles involved in starting a new business, there are also many rewards. If you’re ready to start it up, but aren’t in the position (financially or otherwise) to risk it all in starting something new, you may consider franchising. Franchising offers many benefits to aspiring entrepreneurs, especially to minorities and women, who are seeing more opportunities in the franchise world in recent years.
According to data derived from the U.S. Census by the Small Business Administration, franchising trends show that minorities now own 21.1 percent of franchises with at least five workers, up from 15.8 percent 10 years ago.
StartupNation contributor Steve Friess, dives further into the study, and shares a personal story of a woman who wanted to start her own business and found success through franchising. The article also cites various surveys and research metrics related to minority entrepreneurship and small business.
Read the full article here.
National Brand to Local Business: 3 Rules for New Franchise Marketing
If you’re a seasoned franchisee, we’d love to hear what you’ve learned about marketing a new location! What has worked best for your business?
"Buying" A Franchise
Here at FranchiseHelp we’re constantly asked about the opportunity to buy a franchise. Unfortunately I’m going to have to tell you something that might disappoint you. You can’t “buy” a franchise. In reality you are engaging in a “leasing” transaction rather than a “purchasing” transaction. Why is it a lease? In any franchise deal, the franchisee receives the assets up front, but only for a period of time - the term of the franchise agreement. The term of the agreement may run for five to ten years, or in some cases it may run for as little as a year or two. At the end of the day the renewals of these agreements are at the option of the franchisor, and the reasons for not renewing an agreement should be completely spelled out in the Franchise Disclosure Document (FDD) and franchise agreement.
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.