Franchising

Finding the best franchise opportunities on the Internet can be quite a hard task. There is estimated to be over 3,500 franchise opportunities in the United States and Canada today. Franchising has proved itself to be the most effective form at one to run their own business, but where are you supposed to look? In this article, I will expose to you where you should look for franchise opportunities, how to properly evaluate the franchise, and how to decide if the particular franchise is the right fit for you.

Where should you look for Franchise Opportunities? Well, franchise opportunities are all over the internet, the question for you should be which opportunities are worth your time. First off, I suggest that you put together a plan of action before even beginning to research for the best franchise. You need to sit down and figure out which industry you could see yourself owning a business in. Have you worked in the restaurant business all your life? Are you a personal trainer that has been thinking about opening a gym all your life? These are very valid questions you need to be honest with yourself about. Choosing the industry to buy a franchise in is the most important decision you will make. Once you sign the franchise agreement, there is no turning back.

Okay, so you have found the right industry for your franchise. Now, which particular franchise is the best opportunity for you? When evaluating a franchise, it is extremely important to remember the following: total investment required, franchise fee, management support, number of currently franchised units, and years in business. Those five fundamental categories are the most accurate and best ways to truly see how properly and efficiently the franchise runs. You need to be honest with yourself in regards to your financials. If the initial capital required is $100,000 and all you have is $70,000 then chances are you are looking at a franchise that is way out of your league. It's better to look at lower costing franchises and use the extra money to focus more on your advertising and marketing efforts.

Now, how are you going to decide if the particular franchise you have chosen is the right fit for you? There are a number of points that you need to think about before signing the franchise agreement. First off, does the franchise opportunity express you? This might sound a bit strange, but it's very true. If you are a sports fanatic and a work-out maniac, do you really want to spend your days working in a Florist shop? Chances are that you do not. I have seen franchisees blinded by the promise of making big bucks working in industries where they really have no business being in. Franchising in its beginning stages is a 24/7 at LEAST 40 hour a week job. Don't want to work? Fine, nobody will suffer but yourself. If the franchise opportunity fits your budget, personality, and current life then you should be prepared to put your all in the business for the next couple of years.

Finding the best franchise opportunity for yourself is not an easy task. It can take months, at times even years before you truly find the franchise you want to invest your life into. There are estimated to be over 3,500 franchise opportunities in the United States and Canada today. You should put yourself and the franchisor under a microscope before this life changing decision is made. I have taught you how to evaluate the franchise, yourself, and the industry you should be working in. The rest is up to you my friend. Good luck in your quest to self-employment and independence, it is a great life once you finally reach it.

Several years before, if one wanted to start his own business, his natural course of action would be to do it on his own, depending largely on his business instincts, limited know-how, and observation of the market. The advent of franchising, however, brought a big change in business. Many have since become rich because of franchising. Franchising has indeed many advantages.

You Own the Business - A franchise is a duplicate of a successful business concept. The franchisee owns the outlet, therefore, he hires his own employees and oversees the management its day-to-day operations. He has high stakes in the business because his money is involved.

Ready Market - When one buys a franchise, he is buying an established concept that has a good record of accomplishment. The franchisee is allowed the use of the company's trademark and brand name. Because of this, the company is, in effect, giving the franchisee a license to market its products carrying a brand that is already familiar with the consumers. Many popular franchises have instant brand-name recognition and have created a loyal following among consumers. Therefore, the franchisee is getting into a business that already has a ready market.

Continuous Support from Franchiser - Although running his own business, the franchisee can tap the services of the parent company anytime he needs assistance. The services of the head office organization are available to him, too, whenever he needs help. Furthermore, many companies have field operations personnel whom the franchiser can call on to help him deal with any problem he may encounter in the operation of the business. Most franchises being offered nowadays are turnkey operations. Upon the signing of the franchise agreement and payment of the franchise fee, the franchisee receives the equipment and supplies required in running the business. Furthermore, the franchiser provides assistance in identifying a good business location for the new outlet. The company assists the franchisee in negotiating his lease, preparing plans for outlet layout, shop fitting, and furnishing his store. It also provides assistance in determining the appropriate stock inventory for the opening of the business. This kind of support and the other benefits under the franchise agreement is what sets franchising apart.

Training - The franchisee is given the necessary training to start his business and eventually run it smoothly. The franchisee as well as his employees are taught all the business systems of the company covering product preparation, quality standards, business controls, recruitment of personnel, and marketing. A good franchiser will provide training to the franchise staff on a continuous basis.

Lower Capital Requirement - Compared to a non-franchise business, less capital is needed in a franchised business since the experience and tested system of operations of the parent company would already have eliminated the unnecessary expense incurred through trial and error.

Buying Supplies at Lower Costs - The franchisee is able to procure all necessary supplies at lower costs because the prices are negotiated by the company with the suppliers in behalf of all the franchise units. Because of the size and projected regularity of orders, the franchisor is able to get huge discounts. Buying wholesale for the whole network means big savings for the individual franchises. This gives the franchises a big advantage over their competitors because they are able to reduce expenditures on a continuous basis. This procurement set-up is definitely more advantageous to the franchisee as against procuring supplies independently.

Extensive Promotional Campaigns - A franchise is the beneficiary of an extensive marketing campaign made possible by the sharing of the costs by the franchises. Many franchisees are required to shell out an advertisement royalty to the company as their share in the cost of promotional campaigns of the company, effectively spreading the cost among all the franchises. This accounts for the large marketing resources of the franchiser enabling the company to avail of the services of top-caliber advertising agencies. Being situated in highly visible locations and benefiting from a huge promotions budget is a potent combination that is difficult for competitors to overcome.

Continuous Research and Development Programs - The Company conducts continuous research and development programs so that the business can improve the existing products and develop new ones to offer to the consumers. The marketplace changes rapidly and businesspersons have to keep up with the pace. The chance to seize the opportunity of leading in the market is available for only a very short while. This stiff competition necessitates continuous research and development programs for the company and the franchise network to succeed.

Acquiring the Status of the Company - As a franchise network expands, its stature in business becomes bigger. Mall owners prefer to have popular franchises in their malls because they want to present their shopping centers as a one-stop-shop where everything that customers want can be bought. Therefore, a franchisee will encounter very little difficulty in obtaining a lease in ideal locations. Because a franchisee becomes part of the giant image of the parent company, he will probably find that running a franchised business is not only so much easier than being on your own, it can also be the best decision a franchisee has ever made.

Minimized Business Risks - Because the franchisee is buying a proven business concept, the business risks involved are largely minimized. The parent company has already resolved most, if not all, of the problem areas in its systems and procedures. What the franchisee is getting is a refined package of technical expertise, marketing strategies, and operational systems.

A Unified Set of Quality Standards - All franchise units are required to maintain a single set of quality standards insofar as product, customer care, and service are concerned. Here, the company will ensure that these standards are strictly adhered to and maintained in all its franchise units so that the whole network presents an image of providing quality products and services.

Benefits for the Franchiser - Franchising is a business concept that benefits the two parties involved. For the franchiser, franchising is advantageous because rapid growth can be more feasible even with minimum capital expenditures. When franchisees pay the franchiser for the chance to copy a proven business strategy, franchisers receive a steady flow of cash from royalties, which can be used to expand further. Franchising a business can be like hitting two birds by the same stone: a franchise is being paid to expand it. Moreover, because others operate individual retail stores of the business that the franchiser originally established, direct managing responsibilities become the obligation of the franchisee. Hence, the franchiser will have more time in his hands to explore ways to further develop and promote the business.

The only way to develop as quickly is through franchising. Expansion is the only way a company can realize maximum profits. In franchising, there are not many obstacles to stunt the expansion of a company, therefore, there is a big possibility of really expanding the franchise network not only in the country but also even overseas. At present, franchising is the only business concept that can make that possible. Franchised businesses grow rapidly, sometimes having several outlets in a certain area, pushing the competition out. All these benefits for the franchiser are, in turn, advantageous to the franchisees since the franchises are largely dependent on the success and stature of the parent company.

No other business concept can offer such an attractive and beneficial arrangement

Just have a look around the franchise industry and you will be amazed to find that most of the top franchise companies have humble beginnings. Many of the brands that are popular all over the world started as a small family business and through franchising have turned out to be popular. To franchise your business you need to have knowledge about how to franchise in the right manner to ensure success. Thus, if you dream of making your business big and successful, you can consider franchising your business.

There are many business owners who get confused as how to "franchise my business". Well, before taking the decision to franchise your business, you need to go through a lot of preparations. It is not just a decision that can be implied within a day. Give some time to research and analyze the market before coming to a conclusion as how to franchise my business. Take help of a franchising consulting firm or some experts to help you make the right decision.

The very first thing that you need to understand is whether your business or company is good enough to undergo such a big a step. You can know if you can franchise your business if it possesses the following qualities:

Business Longevity: Franchise experts say that it is a good idea to franchise your business if it has been in operation for at least three consecutive years and generating profit. Also the size of your business should be good enough to attract other investors. Franchising will be successful only if the company possesses a proven track record of success.

Unique Business Concept: The competition in the franchising industry is quite high, so before deciding on how to franchise, make sure your business concept is unique and easy to duplicate. Organize your business system and concept before thinking of franchising it. Success in franchising industry is very much depended on how well investors are able to replicate your system and concept.

Profitable Business: Your business concept must have the ability to make money. Your business must have a consistent record of financial success so that investors can show their trust in your franchise business. Ultimately, it is the motive of everyone to earn and make money. If your business is profitable, it is just the right time to franchise your business.

Affordable Business Format: Most of the investors look at the initial investment while searching for the right franchise business opportunity. If the initial investment is very high then very limited people will be interested in buying your franchise. Along with cost of the franchise, investors also inquire about the return on investment. If your business format can promise high ROI, many will be interested in your business concept.

Marketability Factor: Before you franchise your business, make sure your business idea is easily marketable. Many companies franchise their business when many investors are asking them to franchise their business. This ensures that the business concept is very unique and that is the reason why potential business partners are ready to invest.

To conclude, if your business has that above mentioned qualities or attributes, you can plan ahead to franchise your business.

If you are purchasing a restaurant franchise there are a few items you should know about that are not required to be disclosed in a Franchise Disclosure Document when you buy a franchise. Although the Federal Trade Commission requires disclosure of certain items by law you should be aware of the undisclosed items before you jump in with both feet.

Number One - Franchise buyers who are getting involved with purchasing a franchise for the first time can be broadsided by Item 7 of the Franchise Disclosure Document which requires a statement of working capital needs for the first three months you are in business. This is known as "Additional Funds" according to the Franchise Disclosure Document. If this is your first time purchasing a franchise, it will most likely take you up to two years to break even where your revenue costs equal the costs of selling your product. Meanwhile additional funds will be provided out of your own pocket. For this reason, it is necessary to review the initial build out plus the additional funds estimate and then weigh this against operating in the red for your first two years in the business.

Number Two - Another item that is not disclosed is the amount of revenue the current owner of the franchise is earning with the business. This is Item 19 Financial Performance Representations or Financial Performance of Franchise Owners. According to the laws set forth by the Federal Trade Commission, disclosing financial performance disclosure is optional for the current owner of the franchise. If the owner opts to include financial information you can locate it in Item 19 of the Franchise Disclosure Document under financial performance representations." The fact that the disclosure of financial information is optional would make any franchise buyer wonder why they are investing the money to purchase a franchise when they have no idea what their return on investment will be. On the average, less than 15 percent of all franchise owners disclose financial information. The books and records are available when selling the franchise and they should be available to buyers to help them make the right decision with their investment.

Number Three - You will find that information on the current performance of the franchise is conveniently missing from the Franchise Disclosure Document although the name of the current franchise owner is included in Item 20 of the Franchise Disclosure Document. You will often see a wealth of advice on the Internet about how you should contact franchise owners to learn more about the franchise before you invest. The unfortunate part of using this method is that you will often get a biased opinion and subjective interpretation instead of hearing the true facts about the franchise operation. You can ask them for their financial statement but often they will refuse to disclose them. If they are trying to sell the franchise and they have made some errors along the way, they will not be willing to reveal that in the financial statements. Underneath you will probably ask yourself whether or not you want to buy into the franchise.

Number Four - If franchise owners are motivated sellers and you ask for information on their financial performance, more often than not they will inflate the numbers to hide the fact that they are working long hours each week and only showing a base income of approximately $30,000. Sometimes they do not break down that salary to an hourly wage which results in less than $13.00 per hour.

Number Five - The final piece of information that is undisclosed in the Franchise Disclosure Document are the statistics that show the rate of turnover in franchise ownership. You will find information on the number of units in operation and the number of units that have closed but that is all. What this means for the franchise buyer is that people who have purchased franchise restaurants that have flipped twice, this is still calculated as one unit minus the information on the decrease in value of the unit.

Although these are the disadvantages to buying a franchise or looking for the next big opportunity to purchase a franchise, the franchise market is still robust and continues to grow.

Shopping for a new franchise business and considering your options?  One you might not thought of is the concept of buying a "resale" franchise opportunity. There can be several advantages to buying an existing franchise instead of a new outlet, one being the established track record of profitability by the seller of the current franchise. 

Generally, it is can be somewhat difficult to find existing franchises that are for sale, depending on what business category you desire. In many cases, the franchiser holds the first right of refusal of the existing franchise, so the franchiser is notified of any intention to sell by the franchisee. 

Statistics show that on average, businesses change hands within five years. This is not to be interpreted negatively, as there is a wide array of situations that can lead a franchisee to sell his or her location. Retirement, relocation, health reasons, family, and lifestyle changes are all common reasons why a franchise unit may be for sale. After all, every wise business owner has some sort of a time table for an exit strategy. 

Here are just six of the benefits that come with the purchase of a franchise resale:

Appraising the value is easier to perform and analyze. You have concrete, historical sales and profit and loss data at your disposal, providing you the necessary information to make an accurate forecast about the future performance of the franchise.

The franchise resale is fully equipped and ready to go. You can literally close on the sale of the business today and unlock the doors to let customers in tomorrow morning. 

Pre-existing loyal customer base. When you buy a new franchise, your purchase decision is based on the sales and profitability of other franchise locations, but there is no guarantee regarding the performance of the new unit. With a resale, however, you have the luxury of knowing what to expect.

Attractive pricing. New franchises are offered at a pre-established, set price with little or no room for negotiation. Because a resale may be on the market for various reasons, such as personal or financial, it is within the realm of possibilities to purchase the business at below-market value. The franchisee might be flexible dependent upon the circumstances. 

Time and Money Savings. The resale will come equipped with existing employees, suppliers, equipment, and operating systems.  This saves your budget for other areas, such as additional marketing and advertising.  You save valuable time by having seasoned employees who are efficient at what they do, so your training time is reduced substantially.  And your franchise has pre-existing business relationships with suppliers and vendors.

Potential for buyer financing from the franchisee.  A resale might be easier on the wallet, as compared to the burden of the initial investment of a start-up franchise.  

Franchisers typically don't prefer to have company-owned locations, so they like to maintain a database of potential franchise buyers.  An established, successful franchise resale may be a great option to consider.  

As a franchise consultant, I regularly work with franchise seekers looking for new start-ups, as well as re-sales. In addition to helping those looking for a new location, I maintain a regularly updated list of franchise re-sales in various categories and geographical locations.  Your preference is dependent upon your unique circumstances.

Frequently asked questions about Franchising.

1. What is Franchising?

A franchise is a business arrangement in which an established company sells an entrepreneur or investor, the franchisee, a license to use the name, and sell products and/or services of the franchising company.

2. How Does a Franchise Work?

The franchising company charges the franchisee an initial fee to purchase the rights to franchise their business. The franchising company also charges an ongoing licensing fee based on a percentage of the gross revenue earned by the franchisee in their business. In return, the franchisee is able to do business acting as an extension of the franchising company, while retaining the majority of the revenue earned from the franchise business.

3. Why do Companies Franchise their Business?

The franchising company is able to expand their business without spending any out-of-pocket capital or borrowing added funds. Additionally, the franchising company does not have to manage or maintain the franchised business, as this responsibility falls to the franchisee. Basically, the franchisor earns revenue licensing out their Brand name.

4. What are the Benefits to the Franchisee?

The entrepreneur or investor purchasing the franchise is able to establish their own business using a proven business model, selling products or services already familiar to the public. Additionally, the franchising company provides the franchisee logistical support and advice in selecting a site, securing a lease, building out the space and purchasing supplies to operate the business. The franchisee also benefits from the ongoing marketing efforts of the franchising company.

5. How Much Does it Cost to Purchase a Franchise?

The cost varies widely, depending largely on the franchising company and the type of industry. Hotels and many restaurants require a multi-million dollar investment for the initial purchase. The initial purchase fee for service providers (auto care, appliance service and home repair), and larger consumer retail stores generally ranges from $200,000 - $500,000. Smaller consumer retail stores and home-based franchise businesses can be purchased for $5,000 - $75,000. The cost to purchase a franchise with Relax The Back ranges between $247,500 to $401,500. In many cases, a realistic cost is about $340,000 for a turnkey start-up.

6. How Much are the Ongoing Licensing Fees?

Again, the ongoing licensing fees depend upon the franchising company and the industry. Generally, ongoing fees are based on a percentage of gross monthly sales, ranging from 4% - 8%. Some franchisors charge a flat annual fee and a monthly percentage, while others charge a flat monthly fee with an annual percentage. The fees are usually broken down by royalties, trademark fees, advertising, etc.

7. How Do I Determine the Right Franchise Option for Me?

Similar to any investment opportunity, purchasing a franchise involves a certain amount of risk. The franchising company's stability, the type of product or service the franchise offers, the degree of competition in the marketplace, and the level of support and advertising the franchisor provides are among the key considerations in selecting a franchise. Selecting a franchise with strong Brand recognition, and a proven financial track record, is imperative. When you purchase a franchise, you're trading on the company as an established commodity with strong financial security. The support offered by the franchisor is another key consideration, particularly if you're not experienced in running a business, or running the type of business you're purchasing.

Demand vs. Competition
If you're looking to set up shop in a particular area, you need to evaluate the marketplace. What types of products or services are in demand in the area? What's the level of competition for products or services consumed in the area? For example, just because fast food is popular and successful in your area, that doesn't mean there's room for another operator in the marketplace.

8. How do I Find an Attorney that Specializes in Handling the Purchase of a Franchise?

Purchasing a franchise and establishing your franchise as a new business involves a unique set of circumstances. Using an attorney that specializes in handling franchise purchase arrangements is highly recommended. The best place to start is your state or even county Bar Association. Most local Bar Associations allow member attorneys to designate their specialty. Additionally, The American Bar Association publishes a membership directory for the Forum of Franchising Committee. The directory includes contact information for attorneys belonging to the committee. You can contact the Forum Committee through their website: http://www.abanet.org/forums/franchising, or for further information, contact the American Bar Association: http://www.abanet.org

People often think that buying a franchise is the best way to start their own business. In return for an often excessive franchise fee they will get a 'turnkey' business in a box with a brand name and all standard documentation from the word go. This may be the case but before looking at a mobile phone Franchise you must also think about the all the implications of agreeing to follow someone else's business model. Some pointers to consider are:

1. Franchise Fee - you will have to pay an upfront Franchise Fee. The Franchise Fee will be anything from tens to hundreds of thousands and non-refundable (usually around £140,000 for a mobile phone network franchise such as an Orange Franchise or O2 Franchise). Even if you later realize that the business is not for you the Franchiser is very unlikely to refund your fee, or even release you from the agreement.

2. Franchise Agreement - When purchasing a Franchise you, the Franchisee, will be obliged to sign a Franchise Agreement with the Franchiser. Notoriously these are weighed in favor of the Franchiser, who created the Franchise Agreement, or paid their solicitors to produce it on their behalf.

3. Legal Minefield - Franchise Agreements are governed by Franchise Law, which is different to most other forms of law! A legal minefield.

4. Legal Advice Required - I am no legal expert but I would recommend that you have a legal adviser consider any Franchise Agreement that you consider entering into before you sign it. Or you could be signing away any potential future earnings without even realizing it. So build in the cost of asking a legal adviser to review it and explain what you will be bound to, this can cost anything from £500.

5. Ongoing Payments to Franchiser - In return for using the Franchisers brand name you will be obliged to pay them a percentage of your earnings! They will profit from your labor.

6. Strict and Costly Operating Guidelines - To continue to operate your Franchise you will be obliged to meet the Franchisers, often strict, operating protocols. This can include having to purchase specific items of marketing material at a cost determined by the Franchiser.

7. No Independence - You will have to show the Franchiser complete brand loyalty. Signing up to the Franchise with one mobile phone network will prohibit you from dealing with any of the other mobile phone networks. This will limit both your earning potential and your offer to your customer. Also you will not be able to market yourself as independent!

8. Limits to Stock Procurement and Sales Offer - You will be limited to their choice of accessories and applications, again limiting your earning potential.

9. Requirement to Hold Stock - For a retail mobile phone franchise you will be obliged to hold in a lot of stock at an investment of thousands of pounds. This will include spending money on stock which, in this market place, quickly becomes obsolete and worthless. You could end up watching your investment go down the drain.

10. Strict Premises Acquisition Requirements - If your chosen Franchise requires you to operate from premises then you will have to adhere to the Franchisers location requirements. This could involve you having to sign up to an expensive high street retail premises lease.

In my opinion if you are considering starting a mobile phone francise, such as an Orange Franchise or O2 Franchise, you would be better off starting your own mobile phone dealership as I did. Start your own home based mobile phone business offering all main 4 network solutions to your business customers. This is a far more lucrative business opportunity. The advantages? If you buy my guide and follow my systems:-

o you will be able to manage your own finances;
o you will be able to keep the profit that you make;
o you will be able to run your own business;
o you will be able to manage your own destiny;
o you will be able to offer all mobile networks;
o you will be able to offer your customers completely independent advice;
o you will be able to avoid having to purchase and hold any stock;
o you will be able to buy stock only when the customer has agreed to buy it from you;
o you will be able to choose where to run your business from, even your own home;
o you will be able to choose the hours you work;
o you will be able to choose when or if you employ staff;
o you will be able to avoid making costly mistakes.

Those prospective entrepreneurs considering buying a franchise are bombarded by statistics which show that Franchisees seem to do much better than stand alone small businesses. However they should approach the statistics with extreme caution.

The oft-touted statistic that after 5 years the percentage of Franchises still in business is much higher than non-franchise start-ups is not borne out by anecdotal evidence. So what is the truth? Well much of the apparent discrepancy can be explained by a simple analysis of the way in which the numbers are sampled.

Staggeringly, the basis for franchise associations' surveys is polling of CURRENT franchisees only. This means that the very group that the survey is trying to identify, the franchises that have failed, are excluded from the survey.

The reason for the discrepancy between statistics reported by the franchise industry and independent studies, is difference in methodology. Surveys done by Franchise Associations are done by sending questionnaires only to existing franchisees. Which means that all those franchisees who couldn't make it work and sold their franchises are excluded from the figures. Only the franchisees who went bust and couldn't sell their franchises are taken into account.

How very convenient if the objective of the survey is to promote the sale of franchises!

Always be aware of these harsh realities when considering any franchise:

1. Many franchisees never make much money. Average profitability is poor, especially after taking into account the purchase price of the franchise. So take the hype used to sell franchises with a big pinch of salt!

2. "Studies" used to sell franchises are paid for by the franchisors. Don't mistake the information provided for balanced consumer guide information. It's a carefully engineered sales pitch. Getting hold of the information you need to make a rational buying decision is difficult, to say the least. So use your common sense and a healthy dose of cynical discretion.

3. Franchise agreements always favour the franchisor. It is very easy to be swept away in the heat of the moment and get into a binding contract that is not in your best long term interests. And it is very hard to get out of a franchise agreement without taking a big financial loss.

4. Remember, the main purpose of franchising is to make the franchisor wealthy. So be careful.

Franchise consultants help entrepreneurs build their future, one business at a time. They specialize in expanding and developing small and medium sized businesses, thanks to their expertise on franchising practices and principles.

Franchise consultants are knowledgeable on feasibility studies, business planning and strategy, management information systems, operating system reviews, compliance audit programs, sales system, franchise marketing, operations manual, training manuals, financing strategies, franchise system import and export transactions and most importantly, franchise advisory councils and cooperatives.

By helping their clients search and investigate a possible franchise, franchise consultants are people that must be around before signing contracts.

Because the franchising industry has become a globally accepted business that booms economic significance, franchise consultant is an in-demand profession. Now, there are 17,5000 franchise systems in the world and over 12.5 million employees. With that figure, imagine the number of people in need of consultation.

Franchising may not be the most suitable way to expand a business but franchising growth strategies are applied to industries each year. Franchising has dominated various industries such as food service and retail, and continues to be applied to other businesses like health care, information technology, education, steel fabrication and water purification.

Now, if your business has just started franchising or is already considering franchising as a way to expand, franchising consultants can easily bring their expertise and help you out in each stage of your company's growth.

Hiring a franchise consultant is one of the most difficult decisions a businessman would have to make in his life. Most of the time businessmen who need to have franchise consultants are those who are self-employed.

1. Businessmen started their own business in an inexpensive manner in order to not have much financial risks. With the help of financial consultants, this can be done.

2. Businessmen, after acquiring their financial consultant's second opinion can also buy an existing business. In this way, the businessman is obligated to pay a hefty premium called "good will." It will also boost up the company's status when set against the other industries.

3. Businessmen seize the opportunity to invest in franchised businesses. This often involves a compromise between two choices: to combine a business that has already been tried and tested with the affordability of a new business.

With 17,000 franchise systems all over the world, choosing the right franchise investment can be complicated and daunting. Thanks to financial consultants, you will be assisted in making the right decision.

Franchise consultants study and analyze aspects that businessmen take for granted. By looking into development and franchise rights, franchise consultants can determine whether investing on that business is crucial to the expansion of the company.

Franchise consultants will be able to secure the right opportunity for the businessman's company.

Whether you are the owner of your business, interested in franchising and want your company to grow and prosper, financial consultants can help you strategize toward the growth of your industry.

However, franchising is not the only growth strategy a business can embark on. Franchising can differentiate a business from its competitors but the basic principle is to introduce the company into the whole industry. Franchise consultants make sure that these practices are consistently and often applied.

So if you are a businessman dreaming to have lots of potential and growth, then financial consultants will help you realize your full potential.

In simple terms when you buy a franchise you pay an initial franchise fee and ongoing royalties to the franchisor. For this fee and royalty payment you have the rights to use the franchise business system, sell its products and services and use the company trademarks. The franchisor also provides ongoing business support and a prescribed marketing program. The level of support offered by franchises differs so be sure to do your due diligence and align yourself with a franchise system that offers the level of support that you as an individual business owner will need.

Franchising is a great way to launch your own business. Before you hand over your hard earned money for a Home-Based Franchise in the Pet Industry, perform your due diligence and get the answers to the following ten questions.

1. Is the business model scalable and will the franchise opportunity allow for multiple streams of income? The answer to this question will help you determine whether buying the Franchise Opportunity means you will be self-employed or a business owner.
2. What is the total investment required to open your franchise? Understand and reconcile all the franchise fees so you are aware of the full cost to you
3. What is covered in franchise training? Ask about the franchise training, how long the training is, where the training is performed, who is conducting the training, where you will stay and what kind of expenses will you incur during the training period.
4. Does the franchise offer a purchasing and fulfillment system? One of the benefits of joining a franchise is being part of a business community that has the power of many.
5. Are the franchise systems proprietary? Find out if the franchise system includes customer service data base management systems and other proprietary systems.
6. How will the Franchise and Franchise owners stay current with industry developments and innovations? When purchasing a pet care franchise recognize that the industry is continually developing so any Franchise business you may be considering should have a process to help you stay at the forefront of the industry.
7. What is the website presence like for the franchise and are you provided with a landing page to promote your locally owned business? A marketing driven service business must have strong web presence not only for its corporate office but for each of its franchise owners.
8. Are you provided with the use of a unique toll free number? A strong toll free number adds value to your franchise, especially a vanity number.
9. When you purchase your franchise are you provided with a franchise start up package?
Make sure the franchisor provides you with a start up package with everything you need to open and launch your business.
10. What is the Franchise Marketing Plan. The greatest products and services in the world will not succeed without an effective marketing plan. Determine how extensive the franchise prescribed marketing plan is.

To access the full FREE extended report visit http://www.PetIndustryFranchise.com

If you are looking for a franchise opportunity that will offer you a good earning potential, you may want to consider purchasing a fitness franchise. The current health obsessed climate makes a fitness franchise a good way to create a money-making business while helping people look and feel their best. There are a number of fitness franchise opportunities out there, and finding the right one can be a satisfying venture for your entrepreneurial spirit.

One type of fitness franchise is to open a fitness center. There are a number of types of fitness centers available for your fitness franchise purchase. You can even get specific with your fitness center. There are fitness franchise opportunities that are fitness centers exclusively for men or women or even ones that cater more to the serious fitness guru. Some fitness centers offer only specific types of fitness like jazzercise.

Another type of fitness franchise available is the weight loss center. Some weight loss centers function as both fitness centers and weight loss clinics. You will be able to use your fitness franchise to help people not only tone and exercise, but you will also be getting them on a better nutritional plan.

The third type of fitness franchise involves being a seller of fitness equipment. This type of fitness franchise opportunity can be done through a retail setting or even online. There are a lot of fitness franchise opportunities where you can sell specific types of fitness equipment to used fitness equipment. There is a great demand for people to have access to fitness equipment at home, so finding a fitness franchise to sell equipment can be very lucrative.

No matter what fitness franchise you choose, you still need to follow some basics of choosing and purchasing a fitness franchise. Remember that you will be responsible for all the aspects of your fitness franchise from sales, marketing, and human resources to customer service, operations, legal compliance, and accounting. The good thing is that most fitness franchise opportunities will at least offer you some basic guidelines for operations.

Be prepared to fill out an application for your fitness franchise which will involve a credit and often a background check. If you pass the fitness franchise guidelines, you will probably receive the fitness franchise's Uniform Franchise Offering Circular, or UFOC, which you should read over carefully. The UFOC will include important information like the franchise history, key principles, financial statements, litigations, franchise openings and closings, contacts, agreements, requirements, and more.

Also, be aware that the success of your fitness franchise will be based upon a number of factors such as your territory, site location, and your commitment. Even though much of your success depends on you, it is nice to know that your fitness franchise has the support of the franchisor, so you have somewhere to turn for assistance.

Read the rest of the article here: Fitness Franchise.

The expansion and phenomenal growth of franchising in the United States is a continuing evolution of sorts, taking on new management individuals and owners at an exceedingly swift rate. This is so because of the monumental potential and attached benefits that come with owning a franchise. It's a business model and an industrial trend, one moving at a rate so fast that our capacity and time to continually build more franchise operations is becoming a hectic and constantly persistent task. In the U.S. Alone, there are currently over 550,000 franchise-based businesses, with a new franchise opening up every couple passing minutes. It's alarming, yet the figures scream success. And in the eyes of hungry entrepreneurs seeking a business avenue where self-sufficiency and self-ownership are the main aspects, franchising has become a highly sought after business venture.

Why Franchising? - Why Not?

Overall, the best aspect about going into a franchise is that it gives the pursuing individuals opportunity, both for going into a business setup for and by themselves, but also due to the viable chance of substantial success, all at a minimal risk. Speaking of risks, it's known that when individuals start their own business (that of a non-franchise upbringing) they 9 out of 10 times will fail in a mere span of 3 to 5 years. Yet, if a franchise business (one of corporate upbringing) is pursued, 9 out of 10 times these businesses will be running long after 5 years have passed.

The Benefits of Franchise Ownership Are Clear and In An Abundance

As a franchise purchaser you almost immediately become part of an established and successful business, merely through a proven track record of business prosperity. You are provided a predefined concept with corresponding and successfully sold products and services. From these you can build, mold, tweak and do what you will, all within reason and the bounds of the franchiser, of course. Even better, there's a well-built history in which you can look back on to reflect and plan accordingly ahead, to make improvements and over all changes as you see fit.

Also, and as stated above, there is much less of an endangerment factor involved when going into owning a franchise. Failure is almost non-existent while owning a franchise simply due built up recognition and a firm sense of permanence. Better still, factor in the low investment characteristic. To the benefit of new entrepreneurs, the majority of franchises set forth low front-end investment demands. And if even defined amounts are too expensive, some franchises will actually assist franchisees by arranging borrowing capabilities through lenders.

Grasping Purchasing Power and Holding A Brand Name

Franchises have substantial purchasing power, which can prove quite beneficial when attempting to save money on necessary items to conduct business operations. Demands can be made by large purchasing groups and they are usually accommodated to. Furthermore, franchises offer stability through holding a brand name. Established franchises provide benefits for continuing their good reputation and newer franchises allow for creativity and room for improvement, as to contribute to the gradual creation of the brand itself.

Actually, there is no secret...other than "those who do not know how to do it" think there's a secret to it. With a little knowledge, you won't have to shell out $250,000 big ones just to get your franchise off the ground. In fact, I will show you how to substantially reduce that upfront expense before you get in too deep... read on!

For beginners...

Franchising is the practice of using a successful business model that has been created by another company. A franchise is an alternative way to distribute products or services without having to invest in and be liable for a large company with many branches or stores. The franchisor succeeds because of it's franchisees. The franchisee has a greater incentive than a paid employee because he/she has a direct stake in the business.

Franchises account for:

1.$1.5 trillion in total economic output and growing!

2. Eleven and one half percent (11.5) of the U.S. private sector economy

3. One third (1/3) of all retail sales in the United States

4. Fifteen percent (15%) of all private sector jobs

If you already have a business that you want to franchise, begin by asking:

1. Do I know what franchising is and what it can do?

2. How do I determine if my business can be a franchise?

3. Is franchising the right way to go for my business?

4. What do I have to do to be a successful franchisor?

5. What costs are involved with franchising?

6. What steps should I take to franchise my business?

7. Should I consider Franchising or Licensing?

The following list of valuable "marketing tools" for your business/franchise that can be very expensive when purchased separately versus being bought as a package or with hosting that includes marketing options:

1. Internet Marketing Tools and Streaming Videos: The list is endless these days and would require an entire article just to list a few

2. Intranets and extranets: a) An intranet is a private computer network that uses Internet Protocol technologies to securely share any part of an organization's information or network operating system inside that organization to advance productivity, b) An extranet can be viewed as part of a company that is extended to users outside the company, usually via the Internet.

3. Information or Corporate Portals: A framework for integrating information, people and processes across organizational boundaries.

4. Static and Dynamic Web sites: a) Static page is a web page that is delivered to the user exactly as stored, b) Dynamic web pages are generated by a web application

5. eCommerce and eProcurement Systems: a) eCommerce is buying and selling of products or services over electronic systems such as the Internet, b) eProcurement is the business-to-business, business-to-consumer or business-to-government purchase and sale of supplies, work and services through the Internet as well as other information and networking systems, such as Electronic Data Interchange and Enterprise Resource Planning.

6. eMail Marketing Programs: I probably don't have to explain this one

7. Internet Autoresponder Programs: An autoresponder is a computer program that automatically answers e-mail sent to it. They can be very simple or quite complex.

8. Opt-In Subscription Services: eMail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial messages

9. Other Web-based business applications

Here are just a few types of franchises being offered...does your business fall into one of them:

1. Automotive Franchises

2. Beauty Franchises

3. Beverage Franchises

4. Business Opportunities

5. Business Services

6. Children Related

7. Cleaning and Maintenance

8. Computer and Internet

9. Education Franchises

10. Financial Services

11. Food Franchises

12. Health & Fitness

13. Home Related

14. Low Investment

15. Master/Area Developers

16. Minority Focused

17. Pet Related

18. Photo and Video

19. Printing and Packing

20. Retail Franchises

21. Senior Services

22. SBA Approved

23. Sports and Recreation

24. Travel Franchises

25. Veterans Franchises

26. Women's Franchises

27. Work From Home

Things you need to know that will help you avoid the high price tag for legal fees:

Attorney and legal document fees for franchises can range from $25,000-$50,000 when they have to be created from scratch. And that doesn't include expensive consulting fees that can range from $50,000-$200,000. The best way to gear up is to use a step-by-step approach that has already been created specifically to get the process in motion. There's no need to reinvent the wheel.

Obviously, your best bet is to find a successful and stable company that has the experience and knowledge to guide you through all of the stages and processes; from beginning to end.

1. Research is your friend and the Internet is the one of the most valuable resources available today and if you have time to compare companies, you will find one that is right for you.

2. Finding companies that are attorney and FTC certified and employ industry experts who know their business and yours will save you precious time and energy over the long haul!

3. A few companies provide "bundles/packages" that include everything a franchisor needs in order to save $$ in attorney and documentation fees (this really comes in handy).

By staying focused you can find the assistance you need and be on your way to a successful franchise before you can say "How can I franchise my business?"

Although franchising is widely known to offer aspiring, new business owners the best possible chance of success with the least amount of risk, there are some myths out there that can tend to alienate even the most die-hard entrepreneur. Below, I clear up some common franchise misconceptions that will breathe new life into your goal of owning a franchise business.

Owning A Franchise Guarantees Success. You need to get clear on the myth that by owning a franchise, you absolutely cannot fail. That's a crock. There are numerous factors, both controllable and uncontrollable, that can determine the fate of your success. However, a huge statistic is in your corner: overall, the success rate of franchising is as high as 95%. Of independent start-ups, on the other hand, only about 2/3 are still in business after 2 years and, sadly, less than half survive 4 years, according to the Small Business Association. No guarantees here, but with a determined effort on your part, franchising is the obvious choice. 

Brand Name Means Everything. While you cannot minimize the importance of a highly recognizable brand name, it is only part of the equation. Brand is very significant with burger and automotive franchises. However, there are many franchise categories, some you may not even be aware of, where the brand clearly isn't the main focus, but that doesn't translate to a lack of success.  

Mr. Handyman, for example, a homeowners and commercial maintenance and repair franchise, has over 300 franchise units across the United States and Canada. The Home Improvement market is huge and continues to grow, with Americans spending more money on remodeling, renovating and decorating than ever before. The brand isn't a household name like McDonald's, but this home based franchise is a highly successful one, with a much smaller investment required. 

There are hundreds of consulting type franchises that most people have never heard of by name. Many are extremely successful, with much less overhead, than fast food or automotive franchises. 

A significant investment is involved, so the only one getting rich is the franchisor. What a joke. Franchisors absolutely need profitable, successful franchisees to flourish. The fact that ongoing royalties are paid by franchisees on a regular basis indicates that a fair an equitable relationship exists between the two parties, and that the franchise is profitable. If they weren't, who would pay these fees? A poor performing franchisee will not last very long. The franchising business model is structured specifically so that both the franchisor and the franchisee succeed.

Bigger Is Always Better. Not true, especially in the franchising world. Think about it: would you rather invest every last dime you have into a fast food business, make a decent income, and deal with high turnover, high overhead, theft, worry about what is going on at your store with the brand new teenager that is working the Saturday night shift? Or, would you prefer a home-based service franchise that costs $50,000 (or less), allows for plenty of family and free time, and generates as good or even better income than the food business? Most potential franchisees are better suited, and would even prefer, a small franchise with limited, but highly skilled, employees.

Owning A Franchise Means You're On Your Own. Nothing could be further from the truth. Yes, ultimately, whether a franchise succeeds or fails is the responsibility of the franchisee. However, a huge benefit of being a franchisee is that there is always a support staff, provided by the franchisor, ready to help you with any issue you may encounter regarding your business. Some offer 24-hour call centers. You are most definitely in business for yourself, but not by yourself. 

Because the general disposition of our society tends to be negative, positive aspects regarding anything, including franchising, can become distorted. I've focused on clearing up five of them here, although there are more, to be sure. Do your research and align yourself with an experienced franchise consultant who can provide you with the necessary facts so that you're able to make an educated decision about a specific business opportunity.

Register for your Free Franchise Consultation. The Franchising Authority will help you find your perfect franchise!

Franchise Operations can make substantial earnings. (The Good)

Every hour in the United States a franchise is sold. Franchising has grown into a thriving and established business activity. Large corporations are using franchising as a means for diversification, while franchisees seek it as a competitive edge over other small businesses It is apparent that franchising has become a major force in the food industry. Not only are fast food restaurants franchised today but theme restaurants, catering operations and family style restaurants are being packaged and marketed to a seemingly inexhaustible market of anxious would-be restaurateurs even during recessionary economic times. Franchising is unique in that it probably is one of the few forms of business activity that by its very nature recreates itself by establishing new business units from within itself. The United States Department of Commerce has reported that over one-third of all retail sales are currently made through franchise stores. This growth is expected to continue.

Buying an existing Franchise opportunity (The Good & The Bad)

Owning a successful franchise in the foodservice industry can be a truly comforting feeling. You go to work, hang out your shingle, open your doors and the crowds come rushing in to purchase all of your world famous products. They pay top dollar for them and then go out singing the praises of your establishment and another 50 customers come in and start the cycle all over again. This goes on until you close for the day. Then you lock up and get ready to start the process all over again the next day. Right?

Wrong! This may be the stereotypical version of the way it's supposed to be, but in many instances this example does not apply. The reality of the situation is exactly the opposite. Be aware that in some cases the candidates who pay fees to purchase a new franchise are really signing on for research and development of the concept at their own expense. These newer Franchisers often have not marketed their product sufficiently to know if it will work in all parts of the country or for that matter, the world. Instead, they use the money of their franchisees to further develop their concepts.

Knowing this, why open a company store in a new market area when the risk can be transferred onto an unsuspecting franchisee? I say "unsuspecting" because the profile of a prospective franchisee usually shows far less experience and exposure in the field than that of an experienced independent operator. And after all, isn't that the reason a prospective franchisee, usually with little experience, buys a franchise? Be aware that not every franchise can be for you. Today, there are still dozens of fly-by-night franchise concepts that go in and out of business every year, taking many investors down with them in a flaming crash.

Starting a new Franchise. (The Good)

I was involved for many years with franchise operations and problems as a VP and CEO of franchise companies. I understand that franchising is a rapid and relatively low cost way to expand your business when compared to the money, people and time that otherwise would be required to build, open and operate a chain of company-owned stores.

Restaurant owners interested in successfully expanding their business enterprise may know that now is the time to expand but do not have the financial resources or the management personnel to build and operate a chain of company-owned stores. They should consider franchising. It can be an effective way to obtain capital to build stores and to obtain dedicated people to run those stores. Franchising has proven itself as a successful method to expand one's business and gain national name recognition.

A successful franchise system starts with a successful prototype store. (The Good)

The franchised business must be profitable, have a name which can be registered as a trademark, and have business operating systems which can be taught to a new franchisee. A new franchiser must have sufficient capital to start a franchising program. Prior to selling or even offering to sell a franchise, a franchiser must prepare a comprehensive franchise agreement and register a franchise offering circular. The federal and state franchise laws regulate the pre-sale disclosure of information to prospective franchisees. A franchiser must understand the special ongoing franchise relationship, select qualified franchisees, and develop strong, long-term relationships with the franchisees.

The initial franchise fee is a one-time fee charged to new franchisees to secure the franchise, and it can range from $10,000 and up. The ongoing royalty fee is based upon a percentage of the gross sales of each franchise location. The franchise fee, royalty fees, and the sale of supplies to franchisees are typical ways by which a franchiser makes money. Though the amount of these fees ranges widely, a $25,000 franchise fee and a 6% royalty would be fairly typical. A franchiser can also provide a money savings for all stores, including its company-owned stores, through volume discounts from suppliers of equipment, inventory, services and advertising.

To undertake the legalities of a new franchise, you need a franchise lawyer and a restaurant consultant knowledgeable in franchising. Your franchise lawyer will write the franchise contract, draft and register the franchise offering circular, register the franchise sales people and advertisements, review the real estate leases, prepare any necessary corporate documents, and have the connections with all the business services necessary for you the fledgling franchiser to get started. The Restaurant Consultant can assist with operation manuals, training programs, advertising and public relations materials, franchise recruitment programs, business plans and communication programs which are required by your State's franchising authority. This consultant can also assist in fine tuning your original operation into a smooth functioning multi-unit enterprise.

Franchisee problems (The Bad)

As franchising has flourished so have the problems between the operators and the franchiser. Over the years a host of franchisee advisory groups and franchise councils have been formed by franchisers to learn what franchisees want and need from the franchiser in order to grow and prosper. State and Federal regulations, enacted beginning at the end of the 1970's, more tightly controlled franchising and tended to benefit the franchisee. The 1979 Federal Franchise Act reflects the modern tendencies at all levels of government for tighter control of what franchisers can say and do and with established procedures for the protection of franchisees regarding terminations, renewals, additional franchises and claims against the franchiser. Even so there are often serious drawbacks.

A real Franchisee Problem (The Ugly)

Here is a case in point - My company, GEC Consultants, Inc., was called in to help a franchisee of a small sized but well known 50's burger concept. The client's problem was diagnosed as not having enough of the proper items to make it in Chicago 's diner market. GEC suggested five new items that were then inserted into the operation and for twenty-two days, they sold incredibly well. The franchisee then made a fateful error. He didn't inform the franchise Company of his intentions. This was a violation of his agreement. As a result, the Company threatened legal action if he did not remove these items. Subsequently, the items were removed. A short time later, the franchisee made a request to once again put these items back on his menu and permission was denied. Without the ability to alter the menu to help himself, the franchisee eventually was forced to give his unit back to the franchiser for very little compensation. The Company went ahead and began to operate this unit as its own. Shortly thereafter, a story appeared in an industry publication stating that this franchise was rolling out "new" menu items throughout all its stores and that their reception had been fantastic. These were basically GEC's suggested menu changes.

Here was a case where operators were resourceful enough to see problems with the stability of their franchise vehicle, and found solutions to their problem but were restricted from using them, according to their franchise agreement, and they ended up solving a problem for the parent company unit-wide. When this happens, a franchisee almost never receives compensation nor any credit for aiding in the solution. They may even lose their franchise. It's a no win proposition.

This case indicates that the Franchise Company had always known about the weaknesses in it's menu. The fact that it was hurting their franchisees did not seem to bother the Company. Why should it? They let GEC's client pay for the marketing research and development of the new recipes. After restricting the franchisee's ability to use these new menu items successfully, they simply went in, picked up the pieces, and then did all the things they wouldn't let him do. The outcome was extremely profitable for the franchiser.

Unfortunately, you can't say the same for the poor franchisee. After paying good money to purchase what he felt was a fully developed concept, he got instead a weak sister idea. After the franchisee hired professionals to help rescue their sinking ship, the parent company hid all the life preservers from them. They rescued themselves and discarded their franchisee (our client) like some old tattered pair of pants. This hardly seems fair.

The morale of this story reads like something out of Business Law 101. Caveat Emptor let the buyer beware! When you go out shopping for franchises you had better bring along an expert or you may be buying nothing but trouble and paying your money to further the development of someone else's company.

If you're serious about buying a franchise business then you need to fully understand the franchise agreement to avoid making a bad investment. As a franchisee you assume all the risk!

We've all bought products and services from franchises, and we all have a basic understanding of the industry. In fact, many of us have an intimate relationship with a number of franchises; every time we buy burgers, ice cream, pizza, cleaning services, and a ton of other goods and services, we do it from franchised outlets.

But what we see as customers is just the storefront of franchising. It's what happens in the backroom and how the product or service gets to the customer that we're going to explore in this article. The fact is, that process is often pretty ugly, and only by fully appreciating what can happen in franchising will you be able to lessen the chances of something equally ugly happening to you. There's no one single tactic that will enable you to do this, but rather you'll need use a whole series of actions, skills, and a particular mindset if you want to run a successful franchise operation.

The first thing you have to be aware of is that franchising is self-regulating. The International Franchise Association (IFA) was supposedly founded over dinner one evening in the 1960's by the heads of the leading franchises. The franchise industry was not yet established then, so these corporate bosses agreed to put up money to promote the image of an industry that had already been abused by unscrupulous businesspeople. The idea behind setting up the IFA was to lend credibility to a tarnished business model.

And it worked. One in sixteen Americans now works in a franchised business, and one-third of America's retail goods and services are now sold through franchised outlets. But this success has come at a cost. Many unsuspecting franchisees have lost their entire net worth through no fault of their own, while others have no control over their business and fewer rights than their employees.

This is because in the franchise industry, the franchisors set the rules. They write the Franchise Agreement, and they have the power to tell a franchisee "take it or leave it!" That's not an attitude that creates a healthy working relationship, let alone a partnership.

Of course, not all agreements and not all franchise companies are the same. There are a lot of nasty traps out there, but there also some great opportunities if you know how to tell the two apart. The difficulty is understanding the strengths and weaknesses of any franchise company so that you can make the right choice. How do you tell an unscrupulous franchisor from an honest one? The answer is due diligence.

As a potential franchisee, you have to fully understand every commitment you undertake. Assume nothing and be absolutely crystal clear about every point and every detail, and how each word in the Agreement could affect you while operating your franchise. That's a fundamental mistake in any business and a potentially fatal error in the franchise industry. In a franchise relationship, the franchisor makes no investment and takes no risk. It's all on your shoulders. It's in understanding these elements that will give you the knowledge and conviction to make the best investment of your life, instead of the worst mistake of your life.

Whatever kind of franchise you're thinking of buying, you will be investing and risking $50,000, $100,000, or even $200,000. It's your money and your equity that's at stake, not the franchisors. Chances are, whatever you invest will be a pretty serious chunk of your net worth and life savings. So it's up to you to fully understand the system if you intend to lessen your risk. If you can't do this yourself then you'd better get some professional help.

FRANCHISE SYSTEMS ARE CONTRACTUAL. If you don't understand the contract, you'll never understand the business! Franchise due diligence is the most important step in buying a franchise. Never invest in a franchise without having a thorough understanding of the Franchise Agreement and the Uniform Franchise Offering Circular!

You could become a leader and innovator of your chosen franchise, taking it to new areas. You could help to train new people and help them set up their own franchises, for which you would be rewarded with a share of their profits. But all this takes some management skill and requires you to invest some money as well as time and effort in the franchise.

As an area developer, the franchise would give you a designated area in which to set up your franchises. In turn, the franchise will train you in how to help others set up their franchises and run them successfully. A successful area developer will have the vision of an entrepreneur, able to spot the opportunities where franchises will run well, and the strategies that should be used to make the highest profits.

You will need to have a proven track record at setting up and running franchises. After all, if you can't run one yourself, you can't really tell someone else how to run a successful franchise, can you? You should be able to generate revenue and further the franchise, spreading its name to a wider geographical area and upholding the integrity of the franchise.

The upside, apart from the thrill of knowing that you helped set up franchise outlets and helped people get their own profitable businesses, is that you get to share in the royalties. That can bring in a steady stream of income for you which is almost passive, once the immediate hard work of holding a new franchiser's hand through the initial set up stages is past.

You could become a leader and innovator of your chosen franchise, taking it to new areas. You could help to train new people and help them set up their own franchises, for which you would be rewarded with a share of their profits. But all this takes some management skill and requires you to invest some money as well as time and effort in the franchise.

As an area developer, the franchise would give you a designated area in which to set up your franchises. In turn, the franchise will train you in how to help others set up their franchises and run them successfully. A successful area developer will have the vision of an entrepreneur, able to spot the opportunities where franchises will run well, and the strategies that should be used to make the highest profits.

You will need to have a proven track record at setting up and running franchises. After all, if you can't run one yourself, you can't really tell someone else how to run a successful franchise, can you? You should be able to generate revenue and further the franchise, spreading its name to a wider geographical area and upholding the integrity of the franchise.

The upside, apart from the thrill of knowing that you helped set up franchise outlets and helped people get their own profitable businesses, is that you get to share in the royalties. That can bring in a steady stream of income for you which is almost passive, once the immediate hard work of holding a new franchiser's hand through the initial set up stages is past.

There are several missteps that can negatively impact the success rate of a franchise and leave any franchise buyer very dissatisfied.

As you go through the franchise search process you will run across people who have made mistakes in starting their franchise.

They will, most often, fall into several predictable categories. As you talk to them, keep the following items in mind:

Make Sure You Have Enough Capital

It is true that before buying a franchise you will receive a detailed disclosure document (FDD) outlining the costs of the business.

In addition to that, you will have numerous discussions with the franchisor that will try very hard to make sure you are financially qualified to own a business.

Plus, you will work through your business plan with a bank in order to secure financing and make sure that you have enough cash flow to succeed.

And yet, every franchise system has franchisees who have failed because they simply did not have enough money.

In the end, it is you who is responsible for managing your franchise and your money. To improve the prospective success rate of your franchise, make sure that you have a budget flexible enough to handle diverse situations, put in place a contingency fund, stick to the manual and watch every expense like a hawk.

Don't Save Money on Marketing

It is inevitable that every time the economy slows down, the revenue dips or you lose a big customer there will be pressure to cut marketing expenses.

It is certainly easy to do, most of the time. Just don't buy ads for a few months and you have money in the bank, right?

That is, of course, is a mistake. Unless you got an unbelievable word or mouth or a viral campaign you will feel the long-term negative impact of cutting marketing expenses very quickly.

The good news is that a large number of franchise companies realize that and often require their franchisees to spend a certain amount on marketing every month.

Remember, you have to bring in new customers to grow your business. Customer acquisition costs are almost like cost of goods sold in many businesses.

Stick to the goals you set for yourself before you bought a franchise and look for savings in other areas.
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Talk to Existing Franchisees before Buying a Franchise

This is a big one. The more current or former franchisees you talk to the better. You can get their contact info from the FDD.

Take your time in this process and make sure to talk to 5, 10 or even 15 franchise owners in each system that you validate.

Go to the company annual meeting if the franchisor will allow you. Ask tough questions and concentrate on financial performance data.

If you buy a franchise after talking to only 2-3 people, and the business does not work out, you will have only yourself to blame for not doing enough.

In the end, existing franchisees are the real franchise experts who can give you the best information about the probable success rate of a franchise.

Accurately Estimate Your People Management Skills

Managing people is the biggest challenge for many small businesses. As a potential franchise owner, you have to realistically assess your capabilities in that area.

Sure, the franchise company can train you and provide some day-to-day guidance in relation to managing your workforce.

However, it is up to you to build a dependable, productive and efficient team. If you have no experience in that area and are not looking for that type of a challenge, then try to focus on franchise opportunities that require a minimal amount of employees.

Buy the Right Size Franchise

Make sure to accurately assess your future plans and income goals as a franchise owner. You will have to make sure that the franchise you plan to buy can offer the territory size and growth potential you are looking for.

Sure, you can grow one unit/territory at a time. However, territory availability is rarely guaranteed by the franchisor, and you will never be in a better negotiating position then before signing your franchise agreement.

Size does play a big role in the success rate of a franchise so it is worth it to have your entire future growth plan on the table before you buy.

Follow the Franchise System

Not following the system is probably the worst mistake you can make and is the true culprit behind the majority of struggling franchise locations.

Once you buy that franchise it is perfectly normal to feel confident in your abilities and future prospects.

However, do not assume at that point, that you can do more than the franchisor to make your business successful. Stick to the operations manual, believe in the system.

Do not worry; you will have plenty of opportunities to engage you entrepreneurial spirit, but leave any changes of the business model to the franchisor.

In sum, franchising has a much higher rate of success than independent businesses and offers a number of "safety nets." However, that does not mean that your success is a given.

Plus, it is important to note that during the process of looking for a franchise it is often more beneficial to talk to people who have struggled in their effort to get a business off the ground.

Their journey can provide a valuable lesson on what contributes to the success rate of a franchise.

The goal, in the end, is to avoid the issues mentioned above. As a result, you will greatly improve the potential success rate of your franchise business.

Franchising has become one of the most important and effective business growth strategies in the past quarter century. Although franchise system development dates back centuries to the times when monarchs awarded territories to tax collectors, current franchise business systems date back decades to the Singer Sewing Machine strategy of granting rights to individual business people to sell Singer products in various regions.

A Franchise strategy allows the Franchisor to penetrate, develop, and dominate markets on a simultaneous basis. A Franchise system also allows for each individual Franchisee to own their very own business, and yet participate in, and garner value from, a proven Franchise system.

A good Franchise system allows the Franchise Company to gain market share quickly, which serves as a barrier to competition, and helps build the Brand, which in turn creates exponential value for all stakeholders - including each Franchisee.

So how do you identify a good Franchise system? Well it makes sense that if you want to find out about strategies, culture, and compatibility, then you should ask the right questions. The answers can then be assessed to determine if the fit is right.

The following discussion covers five questions that should always be asked by the Franchise Candidate. If a Franchisor is either unwilling, or unprepared, to answer these questions, it should be a strong indicator that the fit may not be right.

How Big Is The Market?

The Franchisor should have a good handle on the available market for the product or service that you will be offering as a Franchisee. Presumably the Franchisor has done extensive research on the current market size, as well as the potential market size for the future.

The Franchisor should be willing to share that information with you so you can assess the data to make sure that the opportunity is going to be of sufficient size to satisfy your own goals. You may have to sign a non-disclosure agreement first, but the information is important to you, so it must be assessed. The whole idea of Franchising is to ensure that the goals and dreams of the Franchisee, and those of the Franchisor, are unified. If the market availability will allow for strategies to be implemented by you, which are consistent with your goals, and those penetration goals are congruent with the Franchisor's goals, then all is good.

If it's a long-standing and stable market, then there should be plenty of statistics to back up that conclusion. If it's a new and burgeoning market, there should be analysis that you can assess to give you a comfort level that you, together with Franchisor, can go get a significant share. If it's a fad market, or limited life market, then the strategies should reflect that, as should the agreements.

The caution is that if the Franchisor is wishy-washy about the market, or is unwilling to discuss the issue in depth with you, that should be a significant warning sign.

Who are The Competitors?

The Franchisor should have a good understanding about the competition, and how much market share they command. It doesn't matter how big a market is if it's completely saturated, unless the Franchisor has specific strategies to eat someone else's lunch.

The Franchisor should be able to talk to you about specific competitors, what their strategies have been, what they will likely be in the future, and how the Franchise system intends to penetrate that market.

The Franchisor should also be willing to discuss the future competitor that may appear on the horizon. They may not be willing to disclose their specific strategies about dealing with that eventuality - at least not without erasing your memory after the discussion. However, a general discussion about the issue should give you some solace that they have thought about their approach, and that you feel comfortable with their preparedness.

Again, if the Franchisor is not sufficiently prepared to discuss current competition, as well as future competition, then warning bells should go off.

Is The Franchise Scalable?

This issue relates to your own targets, as they all do. If you want to grow a your business to leverage the Franchise process in multiple locations, or by leveraging the results of a number of employees, or by any other criteria appropriate for the business, does the Franchisor allow for that growth? If leverage is one of your goals, and the means and market are available in the Franchise system, what is the cost of that leverage?

Some systems that provide services, won't allow you to hire employees, while others encourage it. In the case of the systems that encourage it, you should ask about the cost of adding units in that strategy, and the training process for any new employees.

In retail environments, the leverage will come from additional locations, or physical expansion, or additional product lines, so your questions must relate to that availability, and the capital cost required to execute the strategy.

Other related questions include asking about geographic restrictions to where you can build business. Again, some Franchises have geographic restrictions, while others allow you to build business without reference to the map.

The important thing is to ask the questions, and understand the answers to make sure your future growth goals can be met by the system you are assessing.

What Are The Franchisor's Growth Plans?

You may think that a Franchisor's growth plans are not important to you once you become a Franchisee. However, there are a number of factors that illustrate that a Franchisor that has continuing growth plans will increase the value of your investment.

The opposite of growth would be shrinkage. That doesn't sound too good does it? The middle point would be stagnation. That's not too attractive either. So why is growth important?

One important factor is related to the penetration goal stated above. If there is room to penetrate, and the Franchisor doesn't have strategies to meet that market, guess want will happen. Yep, competitors will penetrate, and through their growth strategies, they might eat some of your lunch. It is logically better for you that the Franchisor has growth strategies that will address that market need, and grow value in the Franchise system, as opposed to rolling out the welcome mat for competitors.

A second factor is that a normal phenomenon in Franchising is that each Franchise that is added to the system, and each new customer that is added to the system, and each new employee that is added to the system, will increase the value of the brand. Volume carries clout in price negotiation. Messages are carried by more lips. More signs, more transactions, more bank deposits, more customers, more vendors - it all translates to increased brand recognition. Increased brand recognition should translate to more business for each Franchise.

In addition, growth strategies will generally drive up the Franchise Fee. That means that if you pay $2 as a Franchise Fee, and growth strategies drive the Franchise Fee up to $5, then that becomes the base value for your Franchise because the market will pay that price. That's a nice return on investment if it's achieved over a reasonable timeframe, which of course is driven by the Franchisor's growth strategies.

O.K., so there are lots of good reasons that growth is important as opposed to shrinkage or stagnation. However, you must also feel comfortable that the strategy is sensible. That's why you need to ask the questions, and you should expect well thought out answers that makes sense to you.

What Exit Strategies Are Available?

There are many factors that should come into your analysis before becoming a Franchisee. The folly often lies in not considering this part of the equation at the very time that you are considering entry into the Franchise in the first place. That's exactly the time when you need to give significant consideration to the value of the asset that can be created. Ongoing profitability, cashflow, and emotional fulfillment, are all important criteria in the process of making an informed business decision about becoming a Franchisee. But then so is the growth of the asset value you create, along with the ease of realizing that value at the time you intend to exit.

You need to discuss these issues with the Franchisor as you consider the Franchise opportunity. If the Franchisor isn't willing to discuss these issues, then it may mean that there isn't a solid basis for asset growth, and current profitability is the only consideration. You have to determine how important this particular part of the equation is for you. The important part is to ask the question so you can assess the response in terms of your own goals and dreams.

There are many more questions that must be asked of the Franchisor. These five questions will give you a good basis to understand the general strategies and thoughts of the Franchisor. That way you can determine if you have unified thinking, and if that answer is affirmative, then you can craft more specific questions about the system.

To receive a free copy of an E-Book titled 'Franchise Opportunity - Making The Right Decision' by Dennis Schooley, email that request to corp@schooleymitchell.com.

If you are among the many people who want to become a business owner franchising may be the best choice for you! People who start a franchise business have a higher chance for success than those who begin their own independent business. However, even with that said a franchise can still fail. It is important that you choose wisely and do everything in your power to ensure that you are on the right path to success, not the path that leads to failure.

Once you have decided to own a franchise, you must find a franchise that fits you and that you will gain the most from. I will stress that it is critical that you find a type of franchise that interests you. If not, you are wasting your time. You must also find a type of franchise that meets your abilities and skills. If you cannot do what is required, why bother. There are so many types of franchises available; you should have no problem finding one that fits for you. You will have a much better shot at success if you choose a franchise that interests you and that you have the ability to do.

Once you establish the type of franchise you would like to open, you will need to find which franchise you specifically want to buy. For example if you have decided that a restaurant franchise is best suited for you. Then you need find which restaurant you would like to own, like McDonalds, Subway, Sonic, KFC, Denny's, Buffalo Wild Wings, or the many others that are available. This decision is the biggest decision. This will impact your career as a franchisee.

To avoid failure from the beginning you will need to do your research of each franchise you are interested in pursuing. You can do this in a few forms.

The first thing you should do is establish how long the franchise has been a franchise system. Franchise's that have just begun their process can still be a great franchise to purchase, they just involve more risk. One of the primary reasons that franchises are more successful is because in most cases they have already worked out the kinks and have already established best practices and systems for operating the company. So, therefore a company that has been around longer will have had more time to work out the small problems. That does not mean that just because they have been a franchise for a long time they are guaranteed to be successful. It is only one thing to consider.

One of the best things to do is to talk with current franchisee's of the franchise you are considering buying. They will be able to really tell you what is like being a franchisee for that particular franchisor. Remember the franchisor can be biased. It is also important that you talk to a variety of franchisee's from different areas and so forth to give you the best idea.

You will also want to know how much support the franchisor will be offering to you as a franchisee. This is another reason why franchises can be more successful. They get assistance and support from the franchisor when need. In most cases they will provide the training necessary for your success also.

Make sure to avoid franchise failure from the beginning when you are choosing a franchise and you can own a successful franchise!

The rewards of owning a business franchise are many. If you are an entrepreneur who is interested in a business that does not take relatively much time to start, you should buy franchise rights to become a franchisee. Franchising a business is a quick way to starting off a business that does not require much planning, the franchisee continues to operate the business in the original mode of the parent company.

In order to buy franchise you have to decide what kind of business opportunity you are looking for. Business franchise opportunities provide millions of jobs, and income returns to individuals and the companies, and is a sector that will grow in the future, with more and more countries looking to update their franchise laws. The freedom and returns of owning your own business are many, as are the risks that include with any business. If you buy franchise, you take some of the risks out of the equation, but of course, a successful franchisee requires skill and dedication to operate the business franchise.

You can buy franchise rights to various kinds of companies. There are several franchise associations in various countries, and the International Franchise Association gives individuals updates and news about the global world of business franchise, and helps you buy franchise rights to the kind of business you want to operate. A franchisee should have the right kind of information regarding the business franchisor, in order to strike the right deal with the same. When it comes to an individual entrepreneur to buy franchise rights, the franchisor makes certain types of rules in connection with the business. The franchise may be a product or trade name franchise, which implies that the franchisee is not allowed to conduct the business on their own terms and make additional profits, but only use the original parent company's mode of operation.

You can successfully enter the world of business franchise, if you have the drive to buy franchise rights from the right kind of franchisor. Today, there are vast numbers of franchise options for the entrepreneur. You can buy franchise rights to a various business chains in the areas of clothing, food, training platform companies/education, luxury goods, and cosmetics among others. There are several supermarket chains that are hugely successful in the countries like USA, Canada etc.

Franchising businesses helps small to medium scale entrepreneurs grow within a small period, and this is integrally linked to the growth in the economic sector of a particular country. If you are interested in a business venture that helps you rise up in the society, buying franchise is a viable option. The world of franchise is evolving every minute, with more and more options available to the entrepreneur. The financially weaker sections of any society can be helped with social ventures that allow easy options to poor individuals to buy franchise rights, which ultimately ensure the strengthening of the entire social structure of the country.

You can become a successful business owner if you buy franchise rights from a suitable franchisor, and take pride in becoming financially successful.

Is Home Based Franchising for you?

Do you desire Home Business Ownership but cringe at the thought of starting from scratch?

Possibly a Home based Franchise is your answer.

A Franchise is a business in which "... the franchisor, the owner and developer of the franchise system licenses [you] franchisees to use trademarks, service marks, logos, or advertising owned or developed by the franchisor." (International Franchising Association, Franchising basics).

With some franchise programs, the business operates using the Franchisor's brand name only.

Other programs are less restrictive and allow for the usage of both a trade name in addition to the franchisor's brand name.

Common to all franchise programs, the franchisee[ you] is responsible to pay the franchisor, advertising fees, initial fees, service fees, and or royalty fees.

You are responsible for payment whether your business is profitable or not.

Additionally, many franchisor's provide educational programs to franchisees before the inception of the business.

Often times, they've done demographic studies and other studies to ensure that you have greater odds of returning a profit.

Major Franchise Types

o Unit Franchising

Is the most simple type of franchise in which the Franchisor grants the franchisee the right to operate a single operation at a specified location or within a particular territory.

o Area Development Franchising

In accordance with a "development schedule", the franchisee agrees to establish a predetermined number of "unit franchises" within a particular territory.

o Subfranchising/Master franchizing

Is quite similar to Area Development Franchising with the major difference being that the franchisor grants the subfranchisor the option of opening the unit franchises herself or selling the the franchises to third parties. (Common with International franchising)

o Affiliate Franchising

This type of set up is typically used by an owner of an established business who decides to join/affiliate with a franchised chain.

This allows for the benefit of the franchises brand. This is common with many real estate.

o NonTraditional

This type of set up is customized between the franchisor and the franchisee.

Franchises are not the same as Dealerships and distributorships

A dealership or distributorship differs from a franchise in that there is no FEE involved. Dealers purchase products usually from the manufacturer at wholesale prices.

Note however, that a dealership can become a Franchise IF a FEE is paid to the franchisor AND the distributor is dependent upon the franchisor's pay structure.

Considerations when buying a franchise

o There's a benefit to purchasing a franchise that is well known

o Will the franchisor provide ongoing education and support?

o Were demographic studies performed?

o How many of the franchises have closed operation? Why?

o Have you STUDIED the franchiser's Comprehensive Disclosure Statement? It's required by Law that prospective Franchisee's are provided Comprehensive Disclosure, a copy of the franchisor's Standard Franchise Agreement, Audited statements, a list of the names of all of the Franchisees, as well as a copy of all documents that require the franchisees' signing.

By law, each of the above must be provided at least 2 weeks prior to purchase date.

o I've heard the saying, "if you buy a McDonald's, be prepared to eat burger's for breakfast lunch and dinner." In other words, your business requires commitment.

Additional Sources of information

oSuccess Magazine

oInternational Franchise Association http://www.franchise.org

oFranchise Sales Press *Get this magazine since it is known for its focus on franchise opportunities. Further, they perform regular interviews with both franchisees as well as with franchisors.

oSBA Small Business Association

oBrokerage firms and analysts Since stock information on A public company is useful.

oFranchise Lawyer

oFederal Trade Commission Public Reference Branch

oUFOC "Uniform Franchise Offering circular -- the material that is provided by law, by the franchisor to the qualified franchisee. This is likely the most telling of all information gathered.

oAttorney General's Office

oBBB located in the city of the Franchisor's headquarters.

oYour Banker should have access to the Dunn and Bradstreet Report on the particular Franchisor.

oContact the franchisor's franchisee's listed in UFOC. *** Prepare a list of relevant questions prior to calling.

Purchasing a franchise usually equates to a reduction in investment risks since the" system" and Franchise name is established, training and ongoing support is provided, market research has been conducted... Conversely...

franchise ownership can be costly. Consequently, it is critical that you investigate the franchise thoroughly prior to purchasing.

There is a continual rise in the number of franchises. Obviously, there's a HUGE market for this method of business ownership. When approached methodically and practically, Franchise ownership can be Very lucrative and much simpler than beginning a business from the ground up.

Be wise and ensure that you conduct sufficient research prior to commitment.

If you'll need financial backing, then you will need to create a business plan. There's a handy Business Plan workbook available at our site.

Bridging the Gap between Opportunity and Success, OwnABizToday.com

Copyright 2005 Shawn Price