Frequently Asked Franchise Questions
Why Should I Own My Own Franchise?
Business ownership offers you the opportunity to take control of your career, finances, schedule and future. You will be your own boss, work hard for yourself, and potentially reap the rewards that business ownership can offer.
How Do I Choose The Right Franchise?
Deciding which franchise is right for you is a huge decision. The right business should not only interest you, but the initial investment amount must fit into your budget and it should enable you to live the lifestyle you desire (do you want more free time, more money, control over your work environment?). Additionally, any business you choose to buy must meet a market demand in your community. If there is no market demand or the area is already saturated with similar businesses, your new business will not have a bright, long future ahead of it. The best advice is to do your research before signing a franchise agreement. Speak with current and past franchise owners and make sure there is in fact a demand for the business in the area you'd like to open the business.
Why Should I Buy a Franchise?
Regardless of whether you have industry or business ownership experience, you can purchase most franchises because they offer complete training, comprehensive support from the home office, a proven business system, and a product or service that has proven itself to be popular and in-demand.
How Much Does A Franchise Cost?
The cost to buy a franchise varies greatly depending on what industry you choose to start the business in, whether the concept requires a storefront, office, home office, or is mobile, what state you buy the business in, and how much overhead your business will require. There are concepts that cost under $10,000 to start and other franchise businesses that require the investor to have millions of dollars in available liquid capital. Additionally, many franchise concepts offer financing or can help you gain financing if you're interested.
Can I Have A Business Partner?
This varies depending on the preferences of the franchisor but yes, most concepts will allow you to have a financial partner who may also be an operating partner, if you choose.
Can I Own More Than One Franchise?
Yes, but again, this can vary by franchise concept. Many franchisors will sell area or master franchises within a certain specified territory. These larger territories can be costly. If you own a single franchise and are successful, most franchisors will be pleased to sell you another territory. If you own one concept and would like to purchase another franchise from a different, unrelated brand, this is usually possible unless you plan to buy a competing concept. Make sure to read the entire franchise agreement and also have an attorney who specializes in franchise law look over the agreement before you sign it. Let your attorney know that you plan to purchase another franchise concept in the future, so he can ensure you won't have problems.
How Can I Receive a FDD from a Franchise Company?
Inquire to franchise concepts listed on Franchise.com. You will then be contacted by the company. If you are seriously interested in potentially purchasing the concept, they will most likely offer you a copy of their FDD (Franchise Disclosure Document) for review before you make a final decision.
Which States Are Franchise Registration States?
Fifteen states have franchise investment laws that require franchisors to provide pre-sale disclosures, known as FDD's to potential purchasers. These states are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, Wisconsin.
Can you get wealthy by owning franchises?
The simple answer is yes, you can get wealthy by being a franchise owner. However, like any type of business, you get what you put into it. Owning a franchise does not guarantee wealth. But when you pursue the right franchise and diversify your investment portfolio, you’re in a good position to significantly increase your income.
What are the best franchise opportunities?
There’s a lot that goes into determining the “best” franchise opportunities. Startup costs, ongoing overhead, franchise fees, support, brand strength, and financial stability can all play a role. Fast food service usually ranks high (think McDonald’s, Dunkin Donuts, etc.), as well as service-based businesses like The UPS Store, Pearlevision, and Great Clips.
Is a franchise business profitable?
Buying a franchise business can be extremely profitable. That said, when choosing a franchise opportunity, you’ll want to consider the things that make any business profitable. Things like overhead, startup costs, franchise fees, and ongoing training and support can eat into your profits and affect your success.
What is it like to own a franchise?
Owning a franchise is like having the best of both worlds: you are essentially a business owner, can run things the way you want, and gain financial freedom. You also have the backing of a strong brand. Your franchise company has taken away all the guesswork in starting a business and does a lot of the heavy lifting for you.
What are some tips for starting a franchise?
If you’re considering a franchise, your first step is to make sure you have what it takes to run a business. You’ll also need enough capital to purchase the franchise and give yourself a cushion while ramping up. Talk with other franchisees to learn more about the opportunities you’re exploring. Most importantly, be willing to work hard.
How to franchise a business?
If you’re interested in turning your existing business into a franchise, consider if your business is suitable for franchise. Does it have a track record of success? Do you have repeatable systems that franchisees can slide into place? Do you have the means to offer support, training, and help with marketing? From there, it’s a matter of learning the legal requirements and establishing your franchise model.
What is the difference between a dealer and a franchise?
Franchises represent the “parent” company as a whole and pay ongoing franchise royalties to the franchisor. A dealership is operated by an independent business owner, who has more control over how their business is run. They also don’t pay ongoing royalties to the brands they sell.
What must be considered when buying an existing business?
When buying an existing business, you’ll need to review the following: existing debt portfolio, location, P&L statement, equipment, staff, established customer base, the industry, and existing or potential competition. All of these factors will determine your viability to succeed.
Will franchising die out as a business model?
Quite the contrary, since franchising can be a lucrative opportunity both to the franchisee and the franchisor. However, recent years have shown there’s no room in the industry for mediocre franchising, which is why there seems to be fewer opportunities. The good news is that this has led to franchisors doubling down on setting up their franchisees for success.
What kinds of franchises are there?
Franchises can fall into one of three categories: A management franchise is where the franchisee manages the business, but not necessarily the day to day operations. A product distribution franchise is where the franchisor provides the product and the franchisee sells it (think cars, vending machines, etc). A business franchise is where you get the rights to use a trademarked name and all the business tools and processes to sell a product (the most common type of franchise).
What are the best business opportunities that you know?
When looking for the best business opportunities, think low overhead and high demand. Some of our favorites include print on demand, car washes, cleaning services, and second-hand items. You can find franchises available for all of these.
Are franchises considered small businesses?
Franchises are very much like small businesses, but with the backing of regionally or nationally recognized brands. This model tends to have a higher level of success than a typical small business, and you get all the benefits of having your own business, hiring a staff, and setting your own schedule.
What finally pushed you to start your first business?
Time and financial freedom are the most common drivers of starting a business. It’s a great way to increase your earnings potential and not have to rely on someone else for job security.
What's the best US franchise dealership?
Love their food or not, McDonald’s is continually rated as a top franchise. They have one of the most recognizable brands, and demand for their product is consistently high.
Is franchising right for you?
Franchising can be a great opportunity, but it’s not for everyone. You might be a good fit if you have some business experience, are self-driven, and can work independently. You should also be able to carefully weigh risks and recognize good opportunities.
What questions should I ask when buying a franchise?
When buying a franchise, you need to know the following: What are the upfront and ongoing costs of owning a franchise? What training and support do I receive? What are my earnings potential? Do you provide financial assistance? What’s included in the fees I pay to you?
What are the pros and cons of franchising?
A huge advantage of franchising is that you get a turnkey business with very little guesswork in setup. You also have a strong system of support helping to guide the way to success. On the downside, you don’t have total control over how the business is operated. It can also require a significant upfront investment to get started.
What will make me a successful franchise owner?
The best franchise owners will have experience in running a business, hiring and training staff, and managing operations. You’ll also need some marketing experience, as well as the ability to manage money. Independence also means being able to motivate yourself, manage your time, and work with little direction.
What is a master franchisee?
A master franchisee is a franchise operator over a specific area or territory. The franchisor gives the franchisee control over all franchising activities, which means you’ll typically have multiple locations.
What does a franchise broker do?
Franchise brokers represent multiple franchises and act as an intermediary between a franchise and a buyer. They earn a commission when a franchisee purchases from one of their clients.
Should I buy a franchise or get a new job?
Ironically, buying a franchise is just like getting a new job - one you create for yourself. If you have the capital, starting a franchise is an attractive alternative to seeking employment. It gives you more freedom over your career and can increase your earnings potential.
How quickly can I open a franchise?
Once you purchase a franchise, you can expect to open anywhere from 2-6 months. Most of the work is already done for you in terms of designing a store, sourcing equipment, and creating marketing materials. Your franchisor should be able to provide a more accurate timeline.
What is a Franchise Discovery Day?
A franchise Discovery Day is a face to face meeting with a franchise company you’re considering partnering with. These usually take place at a corporate office and serve as your opportunity to go behind the scenes of the brand, ask questions, and decide if it might be a good fit for you.
Do franchises have defined territories?
The majority of franchises follow a defined territory concept. This is helpful if you plan on opening multiple locations as a franchisee, as it helps to protect your area from competition.
Can I open a part-time franchise?
Part-time franchising can work in certain conditions. This is a great option if you’re looking for a side hustle without giving up your current job. Most franchises don’t require you to be open a certain number of hours or days to qualify.
How to start a business with a minimum investment?
Starting any type of business requires some upfront investment. If you don’t have a huge capital reserve, you do have other options: small business loans and grants are available. You can also find investors to fund your venture, or opt for a low cost business idea.
Is it wise to take out a personal loan to fund your business?
For some people, using personal loans to fund their business is their only option. It can also be risky, though, because you’ll be on the hook for repayment even if your business fails. It’s important to have a plan to repay the loan in this case.
What businesses are best for a recession?
Recession-proof businesses are the ones that offer a service people need, no matter the state of the economy. Food and groceries, retail consignment, accounting services, in-home senior care, technology and IT, and childcare can all fall into this category. Keep in mind that recessions are just one of many threats that can impact a business’s ongoing success.
What is needed to apply for a business loan?
Most lenders will only loan to an established business. They’ll want to see your business’s finances over the last few years, along with a business credit score and your plan to repay the loan. They may also request a guarantee or collateral, especially for newer businesses.
Where can you get startup money for a franchise?
Some franchisors will finance the purchase, which is often one of your best options. You can also look into bank loans, SBA loans, grants, crowdfunding, or good old-fashioned loans from friends and family.
How to start a profitable business?
Starting a profitable business is made of many moving parts. It’s important to understand how to choose products that are in demand, how to price those products attractively and profitably, and how to manage operating costs to maintain profitability. When starting out, you’ll want to keep costs low but not so low that you can’t make the right investments. Do your market research to discover competitors and other obstacles that could infringe on your success.