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What Draws Investors to Franchising

Many of the traits which make franchisees different from other employees and workers are the same reasons why investors are drawn to franchising as an option to gain returns on their money. The investor often times is driven to start their own business and franchising is one of the best options for investing their money. Here we discuss some of the most common reasons why investors are attracted to franchising:

1. Control Options

Most prospective franchisees are drawn to the business by previous frustrating experiences in their past employments. This could have been caused due to lack of control over one’s work environment, being bound to report to superiors and insufficient room to exercise one’s authority at their work place. The micro- managing bosses, unresponsive organizational structures, or lack of voice in the organizations process are a few of the reasons why many people decide on investing in franchises as their new career. By investing in this business they take control over their own life with a little risk as compared to starting their own business from scratch.

2. Economic Need

In the recent economic downturn, numerous experienced managers have found themselves unemployed as compared to the lower salaried employees. The market is flooded with managers with years of experience but no job at present. The pool of experienced professionals is stuck between a dilemma that they can neither retire due to uncertain financial times and they can no longer find jobs either. This dilemma however created an opportunity in turn as numerous people have found good returns for their money in investing in franchising. They can now be self-employed while also conducting business on a regular basis. They are no longer afraid of the possibility of downsizing and can see their effort yielding in particular financial returns.

3. Change in Lifestyle

Being under employment, one is bound by the rules and regulations of their supervisors and organization. Further on in one’s career, people find less work satisfaction and become frustrated with working long hours, being away from family and other job related stress. Franchising luckily has so many various business options that people are able to find a business opportunity which offers them the ideal working condition. The investor can search for a business which meets their desired lifestyle and invest in that opportunity.

4. Possibility of Creating Wealth

The key difference between creating wealth and getting rich is that a manager may work their 40 plus years in an organization and retire living off of their savings, but by creating wealth they will have something to show for their effort which bears their individual accomplishment. At the time of selling the franchise they have assets which are worth a lot. Similarly, they can use the opportunity to transform the franchise into something meaningful such as becoming an Area Developer owning several franchises in an area or providing their children with the opportunity to take over the franchise in the future. This cannot be possible in an employment.

Conclusion

There are numerous other reasons why people are attracted to franchising and are willing to invest in the opportunity to do the business. The sense of freedom, the opportunity to bring some change in the community, using the available resources of the investor and converting them into something profitable, and various other similar reasons are just a few examples of the reasons provided by investors who switch to franchising as an investment option.

As Jeff Levy, Prominent Franchise coach and consultant, says about franchising:

“I look at any investment in a franchise as truly an investment, an opportunity to deploy somebody’s capital or certain objectives—financial objectives that they may have.”

Before Buying a Franchise Identify Your TRUE Investment

Your approach as a potential franchise buyer is to identify the real investment dollars you’ll need to get the franchise to profitability. The initial source of this information is Item 7 in the FDD. Item 7 is a schedule that details the estimated investment in the franchise. This schedule includes the cost of various items, including: the initial franchise fee, training related expenses, rent, insurance, professional fees for legal and accounting services, supplies, equipment, licenses and permits and additional working capital. Depending upon the specific franchise, there may be added categories. When reviewing the Item 7 schedule it’s important to know that franchisors are not required to list every type of fee or expense that might be part of the investment in the franchise but rather the likely investment needed to start the franchise. As you work to establish your investment number keep in mind the words “estimated” and “typical.” Item 7 is a guide, and as such, you should use this information accordingly.

Why Doesn't White Castle Franchise?

The answer is actually pretty simple and proves that rabid customer loyalty and a consistent menu, while not sufficient for world-beating growth, can still take a brand a long way.

Best Practices in Protecting and Enforcing Trademarks, Copyrights and other IP

Trademarks, copyrighted works, trade secrets and proprietary business information form the core of any franchise system, and are frequently a company’s most valuable assets. Trademarks, including service marks, logos, slogans and trade dress, define the brand identity as presented to the public. The “behind the scenes” business know-how on which the system is built and implemented by franchisees is embodied in a variety of copyrighted and proprietary works – operations manuals, proprietary processes, recipes and formulas, custom software, advertising copy to name a few.