Franchise Information: Get The Facts Before You Buy

In these unsettled economic conditions we find ourselves in, more and more Americans are coming to the conclusion that what was once considered “a great job” is no guarantee of long term employment anymore.  They thought they had chosen a career they would be in for the rest of their lives, but as many of them are finding out, there’s no such thing as a guaranteed job for life anymore.  And so many of them are looking to strike out on their own and start their own business, and one of the most popular ways of doing this is buying a franchise.  If you’re considering going this route, here are some tips on franchise information you need to know before investing your hard earned money.
How much money will you need to get started?  Most franchisors will require that you have a certain amount of net worth, as well as requiring that you have a certain amount of liquid net worth.  By liquid, they mean either cash in the bank, or assets that can be quickly sold for cash.  You’ll want to find out these amounts, as well as the actual purchase price.

What is the franchise fee?  One of the trade offs of buying a franchise is the fee you pay to the parent company.  You get a business that’s ready to go from the start, with a known brand name and a proven track record.  In return, you will be paying a percentage of your profits to the franchisor.  Franchise fees can vary wildly, and usually there’s some correlation between how big and well known the company is, and how much the fee is, but not always.  Find out the franchise fee, and whether or not it’s fixed, or adjustable down the road.  Make sure you compare these fees wisely, because this franchise information can have a huge impact on your profit margins.

Those are the two biggest questions, but there are several other pieces of franchise information you’ll need before you purchase one.  What is the average ROI for their stores?  You’ll want to have an idea how much money you can make.  How rapidly are they expanding?  Aggressive expansion can be a good thing, but overaggressive buildouts can strain the company’s finances, and if it’s in your area, dilute your market share.  How much hands on help is given a new franchisee when the store first opens?  Yes, they have a great system, but you’ll still want someone to give you a hand when you’re first starting out.

Get as much franchise information as you can before signing anything with a company.  Compare several opportunities, and check out the facts and figures, and then choose the one that’s right for you.