What You Need to Know About Business Franchise Opportunities

What is a franchise?

When you think of a franchise, you probably think of McDonald’s because it is famous for its franchises. So, let’s use the Golden Arches as our example. If you buy a McDonald’s franchise, you will be responsible for running your restaurant, but you will use the marketing methods, name recognition, brand, products, and services that have already been developed by the corporate company. In return, the company receives an initial fee (what you pay to purchase the franchise), and ongoing payments (royalties).

But franchises have expanded way beyond the Golden Arches. In fact, they are a sort of fast-track to business ownership for a lot of people. You can find franchises for a lot of things these days that you might not even realize: elder care, housecleaning, yoga, massage therapy, etc. In the United States there are more than 3000 franchise brands.

Why franchise?

It might seem less risky to purchase a franchise than to start your own business. After all, a franchise gives you an already tested market, a name that is recognized, plus training and support from the corporate office. You might want to go into business for yourself, but not by yourself, especially as the Small Business Administrations estimates that 1/3 of all new businesses fail. Buying a franchise means that you are buying into an established community, where the product has already been tested and most of the issues have already been worked out.

A franchise comes with a built-in safety net, unlike a risky independent business that you have to start from scratch. When you purchase a franchise, it comes as a package complete with operations, marketing, accounting, distribution, and technical support.

Franchising Downsides

Buying a franchise can give you a great head start in the business world, but remember that you are not your own boss. You still have to follow guidelines, often strict ones, to run the business. Franchisors want to make sure the franchises offer the same kinds of standardized services and goods at each location. This means that the franchisee has to follow the guidelines, as well as getting corporate approval for everything from site locations to the goods that are sold.

If you have lofty entrepreneurship visions for your business, a franchise probably isn’t your best bet, Going back to our McDonald’s example, if you are running a McD’s franchise, you can’t sell hotdogs or donuts unless the corporate headquarters decides to. And, when the corporate office does decide to implement a new product, like McD’s did with lattes, you have to do it whether you want to or not.

Must Dos Before You Invest in a Franchise

Do Your Homework: It is really important for you to spend some time doing some research before you make any decisions. You should check out the FTC’s Consumer Guide to Buying a Franchise at www.ftc.gov. Find out about the different franchise available, and compare your options. Network by meeting and talking with existing franchisees—ask questions and get advice. Find out about the communication skills and training offered by the corporate office.

Know Your Limits & Your Market: You need to examine just how much money you can invest before you decide to go ahead with a franchise deal. As well, you need to consider your abilities and goals to make sure your chosen franchise is really the best choice for you. You also need to know the market and believe in the product and service you will provide. Like any business, it is all about location, location, location, so make certain to do your research.

Consult Others: This is a business deal, so you really cannot do it on your own. You must consult with some professional during this time. Do not hesitate to ask questions or receive advice from franchise attorneys, CPAs, real estate agents, landlords, and consultants. You need to understand the legalities involved with the franchise. A franchise contract can be very detailed and complicated, so be sure to consult with others before sighing anything.

Analyze Your Finances: Ask yourself and answer these questions –

  • How much money do you have to invest?
  • How much can you afford to lose?
  • Are you purchasing the franchise alone, or with partners?
  • Will you need financing?
  • If you need financing, where can you get it?
  • How is your credit rating?

Being aware of these things is important because the cost of starting a franchise varies depending on the company. Remember that while a franchise does have more of a safety net than an independent business does, there is still a lot of risk. You will be running a business, so get a business loan instead of using your personal savings.

Network: Networking is important no matter what you are doing. You can meet a lot of new people by attending trade shows or joining business groups. The more people you have in your network, the more support you will have in your venture.

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Comments 13 comments

Angela Harris profile image

Angela Harris 8 years ago from Around the USA

Congratulations on being in the running for pick of the day.


Solorya profile image

Solorya 8 years ago from Oklahoma

Good information, starting your own business always seemed risky to me but buying a franchise might be a wiser decision, especially with a company that is more flexible. Thanks for the info!


Tony Ingoglia 7 years ago

Can you recommend a source(s) for a franchise directory that includes the corp hq and contact names for the health and wellness, sports/gyms and health spas in the USA?


McDonalds Franchise 6 years ago

Franchises are a fantastic business model - IF you are willing to follow a proven system. Once you start to innovate as a franchisee you lose all the value of a franchise.


Mcdonalds Franchise 6 years ago

It cost a lot of startup capital to start a franchise. A franchisee needs to remember it might take awhile to start seeing profits, but it is possible to make a lot of money with the right research and location.


scheng1 6 years ago

It is best to have a strong capital, and related working experience before venturing into the franchise business.


Frank Crandell 6 years ago

It sounds like the best approach to considering a franchise is to do a lot of research. Finding out what it takes to be a franchisee, interview other owners, assess your own ability to come up with the money needed to purchase the business seem to be key activities before jumping in (or not).


Roy Miller 6 years ago

very helpful information. Being strong financially for first two years is really necessary. After that the franchise will take care of itself and you too.


businesstrader profile image

businesstrader 5 years ago from Sydney, Australia

Investing in a franchise is someties the best option as you can already view and use proven business strategies which help sell a particular item.


Rudi 5 years ago

There is a paradox that exists in the world of franchising, whereby a person has to be really wealthy in the first place to be able to afford the type of franchise that is guaranteed to make money: Burger King; McDonald's; Dominos. The only franchises that most people can afford are ones littered with potential risk.


sasta10 profile image

sasta10 5 years ago from Manchester, UK

A great article. I have been to a Franchise Exhibition in Manchester (UK) this year, it was a good experience, I got to meet a lot of Franchisee from all across the UK and there was some large and good franchise opportunities there. Amongst them was Mcdonalds but to join their Franchise you will need a huge investment and also you can not run any other business or work at the same time you run their Franchise. Their support is great though. Starting a franchise is a good idea I think if you are struggling on the job market, epecially if you find one realted to your career path. Thanks.


Puneet_Dutt profile image

Puneet_Dutt 5 years ago

Hi Stacie,

I love this line 'it comes as a package complete with operations, marketing, accounting, distribution, and technical support.' It makes sense for people, it's a no-hassle strategy. Who doesn't want a one size fits all deal? I would.

I think there's only one other thing I would include and that would be the importance of researching and meeting face-to-face. That's the one thing that we do tell people that are considering buying a franchise is to meet with the business opportunity head or franchisor in person at an expo show.

We hold our company's Business Franchise and Investment Expo in Toronto, Calgary and Vancouver just for that sole reason. It's just another way to find out if the company culture and brand is the right fit. Talking is definitely more in depth than just virtual research about the brand.

Thanks for the tips!

Puneet Dutt

The Business Exchange Magazine

www.BusinessExchange.ca

Twitter: @BusinessExchang

Like Us on Facebook! http://www.facebook.com/home.php?#!/pages/Business-Franchise-Investment-EXPO/35978003231


Joyce 3 years ago

I need help with a conclusion pgaarraph?I am typing an essay on Italians, and need help on the conclusion pgaarraph.Here is the essay:ItaliansItalians are warm, welcoming people, who love to relax, celebrate, and socialize with family and friends. Their celebration and relaxation usually takes place around a dinner table at a restaurant or at home, so they can enjoy the traditions of Italian cuisine. Italians have a strong passion for eating, but also enjoy talking.In Italy, conversation is considered an art form. If you were to walk the streets of Italy, or stop at a cafe9, you would notice people of all ages engaged in intense and animated discussions on a wide variety of topics, ranging from family, work, politics, gossip, food, drinks, and sports, especially soccer.From the largest cities, to the most rural of villages, there is one place that will always remain as the central meeting point of Italian culture- the Piazza ( meaning square ). No matter how big or small the Piazza is, you will always see people sitting, strolling, walking, talking, and interacting with one another. Piazzas are also the main focal points for festivals, gatherings, celebrations, and political events.To real Italians, lunch is a 1-2 hour affair with traditionally a two to three course meal, which explains why most places halt for two hours of the day. Stores shut down, banks close, and all of the streets are empty. At around 2 o’clock, people start to emerge from their houses and populate the streets again until around 19:30 when it’s time for dinner. After dinner, the streets come to life again as Italians stroll around the piazza to work off their meal or head off for their evening engagement. Italian food is high in the ranks of most delicious, richest, and most varied of all cooking, with dishes for every occasion. Their food plays a huge role in their life and culture. Every region has their specialty, not only pasta, but all varieties of meat and fish are cooked to old, handed down recipes, mouth watering puddings, and of course, nobody can beat their ice creams. Shopping may not be a national past time, but it is taken very seriously in Italy. The major cities, like Rome, Milan, Florence, are full of the most wonderful shops selling everything from designer clothes to the newest and hippest furniture to be found anywhere in the world. Milan has its furniture fair every year and furniture makers from far and wide will go there to see what is happening at the leading edge of furniture design. Leather is also a good buy in Italy, Italians know their leather and the finest gloves, shoes, jackets, and bags are worn by virtually all Italians. They glory in being chic, and are generally always beautifully turned out. Sports are a very important passion in the lives of many Italians. Football, being their main passion, with hundreds of football clubs with top soccer teams playing for their country. Volleyball is also much enjoyed as is rugby, with the rugby team playing for the European Challenge Cup. Italians place more value on the simple things in life ( family, community, enjoying a Tuscan sunset ) rather than the material things most westerners covet. There are plenty of happy farmers in Italy who want no more than to share a meal with others in their community. The Italian Language is a romance language, spoken as a native language by about 70 million people in Italy, San Marino, and parts of Switzerland, Croatia, Slovenia, and France. Italian is based on the Tuscan dialect, which beforehand was only available to upper class Florentine society. Unlike other romance languages, Italian retains Latin’s contrast between short and long consonants. In particular, among the Romance languages, Italian is the closest to Latin in terms of vocabulary.

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