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The Pros And Cons Of Owning A Franchise

Posted by on January 31, 2011 Leave a Comment

How many of us grow up with the dream of one day working for a boss in a boring 09:00 – 17:00 career? If you’re anything like me, one of your greatest dreams is most probably to be your own boss, work your own hours and enjoy each and every second of it!

One of the safest paths to follow when planning to purchase your own company is to buy a franchise. When a franchise opportunity comes knocking on your door, it is a good idea to know what the pros and cons of running a franchise are, and if it is the ideal thing for you to invest in.

Let’s first take a look at some of the “thumbs up” elements of a franchise opportunity:

A great deal of franchises are already well-established market leaders in their particular fields. By purchasing a well known franchise outlet you don’t have to start from level zero and build up the brand first. Customers will already know that your outlet offers the best pizza, juice, paint, clothing, or whatever else you’ve decided to invest in. You do not need to try and persuade the buyer that “Benny’s nameless pies” are the best that you can buy; they will know from experience that your product/service may be trusted.

The franchise head office already has marketing and advertising strategies set up for whatever it is your franchise offers. Franchises are usually available countrywide and that’s why a lot of extensive marketing and advertising is done to ensure that the business is regarded as a household name. You are usually still allowed to do some of your own local promoting, it generally just needs to be cleared with head office first. Once more, just imagine if you had to try managing a successful marketing campaign on your own – tv adverts, radio adverts, newspaper adverts and other advertising can cost you a pretty penny!

You are not alone. Most franchises offer continuous assistance for their franchise owners. Whether it be technical information, brand strategies or any other assistance, help is generally just a phone call or email away. Remember that the people that you purchase your franchise from have been in the industry for some time and they have a lot of know-how available to share with their franchise owners. Ultimately, by helping their franchisees, they are in reality helping the brand and themselves too!

So far so good, don’t you think? So what on earth are the “thumbs down” aspects of a franchise opportunity then?

For most franchises a monthly franchise fee is payable. This can differ from a set amount per month to a percentage of your monthly turnover. For franchises with small turnovers this can sometimes be a bit of a “money muncher”, particularly if the franchise fee is already payable from month 1 when you are still trying to find your feet.

Franchises come with a lot of very strict rules and regulations that each franchise owner must abide by. Should you be more of a free-spirit who does not like to do what is expected from you, you will possibly not be the perfect franchise owner.

Think about the above very carefully and make a intelligent choice about your future!

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All About Franchise

Posted by on July 13, 2010 Leave a Comment

Franchise is a license granted by a company or firm on certain terms and conditions to an individual or firm to operate a retail outlet in a specified area or place. The company or firm which grants the license is called as franchisor, where as, the individual who accepts the terms and conditions to operate a retail outlet is called as franchisee. Here the franchisee agrees to use the franchisors brand name, products, services, promotions, selling methods, add display and distributions on certain terms and conditions. The franchisee pays a fee to the franchisor for the license to sell its products, services or goods.

This type agreement helps both parties, the franchisor gets new area to establish business whereas the franchisee will get already developed brand products and having no guess work about what to do, because all development and decisions are made by franchisor and everything is laid out, step by step, with nothing missing or left to chance and it all works with precision. In legal terms franchise is a contract. The franchisee is usually granted an exclusive territory in which he or she is the only distributor of the particular products or services in a specified place. The franchisor is obligated to assist the franchisee through advertising, promotion, research and development, quantity purchasing, training and education etc. A franchisor also has to disclose the background of the company including the business experience of its high level executives and whether any of its executives, within the last seven years.

In addition to this disclosure factual description of the franchise and statement of the total funds to be paid such as initial franchise fees, deposits, down payments, prepaid rent, and inventory purchases is mandatory. Conditions must also be clear on recurring costs such as royalties, rent, advertising fees etc. The information was given by someone who used to do business coaching in Auckland. He’s now opened a franchise dealing with baby clothing and wedding gifts.

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Franchises: What They Are And Why They Are Profitable

Posted by on June 1, 2010 Leave a Comment

A franchise is when a company grants an individual or group the right to market goods or services in a set location or territory.  The franchisee in this equation is the individual or group of people and the business allowing the person or group to utilize the business’ trademark and name is referred to as the franchisor.  Many of the most widespread franchises across the globe today, (such as Pizza Hut and 7-11), originated in the United States but have since spread to other countries.  Franchise opportunities are available in a variety of markets including fast food, mini-mart, hotel, and service industry businesses.  Franchise opportunities are available in a variety of price ranges.  Smaller franchises often start at just $2,000-$5,000, while larger franchises can be a few million.

The Perks of Being a Franchisor
Being a franchisor can be extremely lucrative as they are given not only a royalty fee for the use of their business model and trademark(s), but a monthly payment as well, based on the sales at each franchise location.  A franchisor also has the benefit of more locations, without the headache of having to personally manage each one.  The franchisor also benefits from the enthusiasm of the franchisees, who are often very determined to succeed with their new franchise.

The Perks of Being a Franchisee
A franchisee can also profit from a franchise opportunity.  Often investing in a franchise for sale is of lower risk for the franchisee than it was for the original franchisor when they started the business.  By the time a company is offered as a franchise, most of the kinks have already been worked out.  A franchisee also benefits from the franchise’s training and development programs and support desk.  Most franchises also run country or state wide marketing campaigns which can help increase the sales of locations within the area of those campaigns.  Because of the tried and true record of a franchise, lending institutions are more likely to loan money to franchisees.

Types of Franchises
A franchise for sale will usually fit into one of the following categories:

  • Event Franchises – Includes the duplication of events, such as speed dating or economic forums, in a variety of different geographical areas and venues.
  • Social Franchises – This type of franchise can range from small scale and inexpensive, (such as a candle making business), to very large and expensive, (like a hotel or hospital).
  • Business Format – Business model and trademark use rights are given to the franchisee.
  • Product Format – The franchisor, (a manufacturer for instance), allows the franchisee, (often a store owner), to distribute their products.
  • Manufacturing Franchises – A franchisee is given the right to produce trademarked goods.
  • Business Opportunity Ventures – A business owner buys and distributes the merchandise of a franchisor.

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Do You Really Want to Own a Franchise?

Posted by on August 21, 2009 Leave a Comment

Do You Really Want to Own a Franchise?

No matter what job you have, there are probably days when you’ve just had it with excessive demands on your time, conflicts with coworkers or company policies, and pay raises that barely keep up with inflation. At that point, you may start thinking about being your own boss-realizing the American dream of owning your own business.

 

 

 

You may have thought about buying a franchise. In this business arrangement, a franchisor (the parent company) sells the franchisee (you) the right to sell its goods or services in exchange for a franchise fee. It might seem like just what you need to make a big change in your career and your life. After all, everyone already knows about Meineke Muffler, Subway, Dunkin’ Donuts, Stanley Steemer, and hundreds of other businesses that have made the roads going through most of America’s towns and cities look pretty much alike these days. As a franchisee, you’d have the advantage of being able to use the company’s name, recognizable storefront, and trade secrets. And you’ve heard that franchise fees for some businesses run as low as $10,000.

But do you really know what’s involved in a franchise agreement and in running a franchised business? There is much more to it than paying the franchise fee and opening the doors. While fees may seem fairly reasonable (the majority are under $40,000), that’s only the beginning. You will need an upfront investment that amounts to much more than the franchise fee. For example, survey results in the article “Annual Franchising Industry Overview” ( Bond’s Franchise Guides) showed an average of $27,300 for a motel franchise-but estimated start-up capital or line of credit was $6,600,000. Even a smaller-scale business category-say, a shop that sells donuts, cookies, or bagels-carries an average franchise fee of $24,676 with estimated startup capital at $261,165. In addition, most franchisors have requirements for your personal net worth.

Owning a franchise is not easy, and anyone who goes into one believing that the business will run itself is destined for failure. It carries a lot of responsibilities. In fact, you may feel that you’re still working for someone else once you learn about the restrictions, requirements, and specifications that will be imposed on you by the franchisor. You will need to unerringly follow their practices and meet their standards, and you will sign a contract that says so.

The contract will also spell out what happens if you want out or can’t make a go of the business. Some franchisors specify in their contracts that even if you are running the business as a corporation, you and your spouse can be sued as individuals. You’ll want to hire an attorney to carefully check the whole contract over before you sign anything. You’ll also need an attorney to help you obtain the business licenses you will need. If you will be selling food to the public, you’ll need a license from the health department, and you will also need to always be ready for surprise inspections.

But let’s say you’ve got enough saved for the fee, you’ve got a more-than solvent net worth, you feel capable of understanding and taking care of all the details, and you can borrow the rest of the money you need. What could go wrong? It sounds like a sweet deal, doesn’t it?

That depends…

Do you have enough money to run the business until it starts turning a profit? This means you will have to pay employees, pay for product, make payments on your business loan, and send the franchisor a monthly royalty of 4%-8% of total sales (not of profit), depending on your contract. Other initial and ongoing costs include insurance, employee training, inventory, equipment, rent, maintenance of the site, and your share of advertising expenses.

Was the franchisor’s projection of your earnings overly optimistic?

Is your family behind you-even willing to work with you? Does everyone realize that you will be working hard at the business location for all the hours it is open every day, and that you will be the first one there in the morning and the last one to leave at night? do they realize that vacations are pretty much out of the question for a long time now, and that even if you manage a weekend getaway, you’re always “on call”?

How well do you interact with people? You will be dealing with employees (some of them unreliable), customers (some with complaints), and your contact people at the parent company-in effect, your new bosses.

If things get crazy, can you keep your cool?

Did you choose a business that you actually enjoy and find exciting? Or did you just buy yourself a job that has got you trapped even worse than the one you left behind?

An Alternative Plan
There is a much less complicated way to achieve financial independence and success without jumping on a franchise rollercoaster that never stops. We offer a viable, legitimate way to earn an exceptional income without the huge investment, the loss of freedom, or the sacrifice of time with your family. As a home-based business owner, you’ll work in the peace, quiet, and comfort of your own home. You’ll set your own hours. You won’t have employees that drive you crazy. Instead, you’ll work with a support team that will mentor you in a professional, respectful manner.

You can ditch that going-nowhere job and be your own boss-without the hassle of a traditional business. For free, no-obligation information, simply visit my website @ http://www.5HourWorkDay.com

Just for visiting you can get my 7 day Success e-course.

Sincerely,

Dennis Rossignol
206-786-0098

http://www.5HourWorkDay.com

 

 

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