Time Saving Tips for Franchise Shoppers
Time is a precious commodity these days and although buying a franchise is a time consuming process, there are ways to cut to the chase. Of course you should do your due diligence, but first make sure you’re focused on viable choices. Here are some tips to quickly identify the best franchise opportunities for you so no time is wasted.
- Know what you want. Before you even begin shopping around, clarify what you want in a franchise business. Make a checklist of the characteristics you’re looking for. Use your checklist to quickly weed out franchises that don’t fit the bill.
- Know your limits. Have your accountant help you determine how much you can invest. Then look in the FDD/UFOC to find the amount of net worth and liquidity that's required by the franchise. Don’t waste time investigating a franchise you can't afford.
- Look for open territory.
Ask the franchisor if there are opportunities available in the area where you
want to locate your business. If not, look elsewhere.
- Review Item 3 in the FDD/UFOC. That’s where the franchisor is required to disclose any relevant litigation history. It will give you clues about the organization’s relationships with its franchisees.
- Don’t bet on bad odds.
Check the franchisor’s failure rate. You’ll find it in Item 20 in the
If the track record doesn’t look so hot, it’s probably not. Move on.
- Have the right stuff.
A good franchisor will tell you what characteristics and skills they expect
from franchisees. If you don’t measure up, you’re wasting your time and
- Get the inside scoop.
Find out if a franchise is a good match for you by talking to the company’s
existing franchisees. Get on the phone and start asking questions. You’ll
quickly get a sense of what it would really be like to become a franchisee in
To learn more about franchise opportunities and business opportunities, visit us at FranchiseHelp
Breaking Down an FDD
Once you've found a franchise (or multiple franchises) that you are interested, the real research and diligence process begins. You need to figure out whether the franchise you are looking at really makes sense for you from a financial and lifestyle perspective. Your best source of information for all of this is the Franchise Disclosure Document, or FDD.
What To Negotiate in the Franchise Agreement
Before going into the negotiating aspect, one must always ask the franchisor whether they are willing to negotiate. Usually franchisors state that they have a rigid Franchise Agreement and that it is not open to negotiating. However, there may be some instances where the franchisor may allow some flexibility. Stated below are a few tried and tested tips for negotiating franchise agreements and which areas to concentrate one’s efforts on.
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.