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Why Buy A Franchise?

Posted by: Franchise Opportunity Specialist Posted Date: 11/19/2008

So, you've decided you want to be your own boss.  Why would you want to buy a franchise?

A franchise is an excellent way to be in business for yourself, but not by yourself!  You can be your own boss and still have the support from the Franchisor.

You can find out about the franchise before you buy it - you can talk with franchise executives, speak with current franchisees, etc.

You will receive ongoing support from the franchisor and other franchisees.

You will have national buying power (something very hard to achieve as an independent business).

You will have the benefit of a name brand.

The franchise already has a proven system - you just have to follow it!

What the Obama Presidency Will Mean For Small Businesses

Posted by: Franchise Opportunity Specialist Posted Date: 11/06/2008

Here we are - two days after an historic election.  I found the Wall Street Journal's Independent Street blog to be interesting today.  You can read their blog and see what readers think.

Click Here!

What Happens Because of Franchised Businesses?

Posted by: Franchise Opportunity Specialist Posted Date: 10/30/2008

The economic impact of franchising goes beyond activities inside franchised businesses, because their purchases of products and services and the personal purchases of their owners and workers contribute to the growth of non-franchised businesses. As a result of these spillover effects, the total impact of franchising was to provide 21 million jobs (15.3% of all private-sector jobs) and $660.9 billion of payroll (12.5% of all private-sector payroll) in 2005. Output produced because of franchised businesses grew from $1.5 trillion in 2001 to more than $2.3 trillion in 2005; an average growth of 10.9% per year. In 2005, output produced because of franchised businesses accounted for 11.4% of all private-sector output.

This information was taken from the Special Report: Economic Impact of Franchising, Vol. 2 article in the March 2008 edition of Franchising World.

Presidential Candidates Answer IFA Questions

Posted by: Franchise Opportunity Specialist Posted Date: 10/07/2008

In an exclusive to Franchising World, Presidential candidates Barack Obama and John McCain have outlined their views on issues important to the franchise industry, the International Franchise Association (IFA) announced today.

Click here for details

Did You Know?

Posted by: Franchise Opportunity Specialist Posted Date: 09/30/2008

 

21 - The percentage of sales alcoholic beverages make up for full-service restaurants. Source: National Restaurant Association

30 - The percentage of job applicants who misrepresent their working history. Source: SHRM (Society for Human Resource Managers)

52 Million - The number of slices of pizza Americans consume during the college basketball tournament, culminating with the final four in April. Source: The Christian Science Monitor

“Slacking Off” Can Actually Improve Your Performance

Posted by: Franchise Opportunity Specialist Posted Date: 09/25/2008

I came across this article on CNN. It discusses how slacking off sometimes can actually help you get things finished! Thought the article was very interesting. Click here to read it!

Interesting Franchise Facts

Posted by: Franchise Opportunity Specialist Posted Date: 09/24/2008

454 - The number of fast-food franchise systems in the U.S., according to FRANdata

164 - The number of franchises that can be run from your home, according to FRANdata

$500 - The amount the “average” American spends annually on fast food. Source: Survey conducted by Research International USA, seen in USA Today (6/6/2008)

Low Cost Marketing Ideas

Posted by: Franchise Opportunity Specialist Posted Date: 09/19/2008

I ran across an article on Entrepreneur.com and thought it would be great information for small business owners and potential small business owners and franchisees. In today’s tough economy, its always useful to find low cost ways to market your company.

Click here to read the article.

Buying An Existing Franchised Business

Posted by: Franchise Opportunity Specialist Posted Date: 09/18/2008

Often Franchisees will decide to sell their business before the end of the term of the franchise agreement. This could be due to a number of reasons: health, personal circumstances, undercapitalization, and/or inability to follow the system. The price you pay is similar to the Existing Independently Owned Business, however, there’s also an “intangible” factor. The fact that the business is a franchise brings certain “intangible” value because it’s a system of doing business and it’s proven because of the brand and number of units. It can also bring a higher multiple of cash flow in pricing the business.

Sometimes the franchisee wishes to sell at a point when the business is at “break even” or slightly negative in the cash flow. The business is past the “ramp-up” stage and is on the way to cash flow positive position; however, the buyer candidate will need to be someone interested in franchised concepts and someone who sees the value of the partially ramped up business. Because of this factor, the buyer base is limited. In addition, the franchisee will often want to recapture his total investment. This is typically not possible at that juncture. Existing business buyers are seeking a “stream of income”. Since the business is not making money at that point, the buyer will not be willing to pay enough for the business for the franchisee to recoup his entire investment.

An experienced business broker or franchise specialist can help you though the red tape and difficulties in finding the “right” buyer candidate for your particular business.

Buying an Existing Independently Owned Business

Posted by: Franchise Opportunity Specialist Posted Date: 09/16/2008

Existing Independently Owned Business – Some buyer candidates wish to avoid the “ramp-up” stage and seek a business that has already ramped up and is currently profitable. The price you have to pay is directly proportional to the earnings of the business. Existing businesses are typically priced as a multiple of cash flow. The cash flow is defined as what’s left after “necessary” business expenses have been deducted.

Some of the pitfalls you could encounter: make sure there’s documentation to support all financial information including tax returns, sales tax returns, etc. Make sure the greatest part of the revenue is not derived from only 1-2 customers. If so, how will you make sure to keep those accounts? Research the industry and competition. Check for market trends and the possibility for expansion. Make sure the seller has adequate equipment and it’s all in working order.

Considering Business Ownership?

Posted by: Franchise Opportunity Specialist Posted Date: 09/10/2008

If you want to get into business for yourself, you can buy a new franchise, buy an existing franchise business, you can buy an independent existing business, or you can start a new independent business. Over the next few days I am going to go over some of the pros and cons of each. Today we will start with a new franchise.

Many people who haven’t owned a business before gravitate to a franchise because of the training, the marketing assistance, the assistance of the franchisor and other franchisees and the BRAND. The concept is typically proven because “X number” of franchisees are using the model everyday. It is less risky than starting your own business or buying an existing business. Who will you call if something goes wrong in a start-up or an existing business after the transition period when the seller has moved on to something else?

Let’s face it…you will make mistakes. A franchise will possibly lessen the number of mistakes because the learning curve has been diminished. As the franchisor works to expand their brand, they strive for the right fit in franchisees so that the franchisees validate well when contacted by “prospective franchisees”. Therefore, the franchisor has difficulty selling franchises without “happy” franchisees. Will 100% of the franchisees be happy? Of course not, because some will not be following the system and perhaps have found out they are not a good fit for this particular franchise concept. The other common reason for unhappy franchisees is the franchisee going into the business undercapitalized. Franchisors will tell you to plan for 6-12 months of working capital. Invariably, some people will think they can make it work in 3-6 months. Tough to do.

Customer Service is Key

Posted by: Franchise Opportunity Specialist Posted Date: 09/09/2008

I ran across an interesting article posted on Newsday.com. Customer service is definitely key for small businesses. It is the way small businesses can differentiate themselves and compete with larger competitors.

Click here for the details.

Reasons Not To Buy A Franchise–Debunked-Part 2

Posted by: Franchise Opportunity Specialist Posted Date: 09/04/2008
  1. I don’t want to work 24/7
    Again, this comes down to research! You need to thoroughly understand what you are getting into before you purchase a franchise. Ask existing franchisees how many hours they work now and how many hours they worked when they first opened the business. Starting a franchise or any business is hard work. You need to be prepared to work long hours (at least in the beginning) to establish your franchise. 
     
  2. The market is already saturated
    Do your research! With all the different franchise opportunities available, carefully research which ones you think would be successful in your area. What types of retail or services are missing in the area around you? 
     
  3. I don’t want to buy myself a job
    Buying a job is usually not the goal of franchise buyers. Sure, you will have to work in the business at least in the beginning. As your business grows and becomes profitable, you can slowly step back and put managers in your place. There are also other opportunities in franchising like Area Developer or Master Franchise opportunities that allow you to build your own local empire of franchisees and create residual income for yourself.

Franchising is a great way to get into business ownership. Confused by all the options out there? That is why you need to utilize the FREE services of a franchise consultant/broker. They can help you with the research and selection process of buying a franchise.

Click here for more information about me and the free consulting services I offer to my clients.

Reasons Not To Buy A Franchise – Debunked

Posted by: Franchise Opportunity Specialist Posted Date: 09/03/2008
  1. The franchisor makes all the money
    This is a common misconception. Yes, Franchisors do charge an up front franchise fee. Yes, they also charge an ongoing royalty payment. But most of this money is invested in you, your training, and brand awareness nationally and in your market. The franchise fee you pay gives you the right to the Franchisor’s system. They train you in all aspects of their business. The ongoing royalty payments are used for advertising and to keep the brand in the public eye. It is in the best interest of the Franchisor to make sure that Franchisees are profitable and happy. If Franchisees are unhappy, it will be very hard for the Franchisor to sell more franchise territories.
     
  2. Franchise businesses are too expensive
    Aside from the initial franchise fee (which provides you with thorough training on all aspects of the business you are buying), franchised businesses cost the same to start as independent businesses. This is where your research comes in. Choose a franchise model that you can afford. They range from a couple thousand dollars up to a half million or more depending on the type of franchise and the industry. 
     
  3. I can’t wait 2-3 years to make money
    You may not have to wait 2-3 years to make money. Research – Research – Research. When you are deciding which franchise you want to purchase, call existing franchisees…ask them if they are profitable and if so, how long it took them to start making money. 
     
  4. I am not interested in auto or food
    Great! You don’t have to be interested in auto or food to find a right fit in franchising. There are over 5,000 franchise opportunities in 80 different industries. There are thousands of franchise opportunities that have absolutely nothing to do with auto or food.

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