Tips for Buying a Franchise
So You Want to Buy a Franchise?
Buying a franchise is a great way to have your own business without worrying about the marketing and startup costs. Franchises usually have a recognizable brand and product that appeal to customers which is why the business is able to grow and have several locations throughout a certain area. By knowing how to buy a franchise, you could be on your way to a successful investment with a company you already know.
Select a Franchise to Purchase
Before deciding on a franchise to purchase, there are some things to consider. Evaluate the community where the franchise is located and determine if there is a market for the products or services offered by the franchise. If it is an existing franchise location in the community, evaluate how well it has done financially in recent years. This will take some research and even visiting the location several times to see how many customers are frequenting the business. If it is a new franchise, determine if there is a need in the community and if it will attract repeat business. Also, consider competition in the area and the company's reputation. All of this will play a vital role in your success when buying a either an existing franchise location or setting up a new franchise location in a community.
Look for Ways to Purchase the Franchise You Have Chosen
Some companies offer information about buying one of their franchises directly on their website. Chick-fil-A, for instance, tells you that you can buy into a franchise location for only $5,000 if you meet certain requirements. The website also gives information about training, testimonials from other franchise operators and an application to fill out to become a franchise operator. According to the Federal Trade Commission, there are also franchise expositions in which many companies come together and offer franchise opportunities to entrepreneurs. Also, franchise brokers are available to evaluate your financial position and help you up with franchises that meet your budget and your qualifications.
Speak with Other Franchisees
When you have a short list of franchises that interest you, speak with other people who have purchased franchises in those companies. Find current franchisees and former franchisees to determine what the perks and bonuses of the company are and the downsides as well. Ask about how much help the company offered in terms of training, marketing and advertising. Also, find out if they were happy with the way the company handled deliveries, quality and other concerns. You can also ask about the franchisee's profit during their time with the company. The more questions you can ask current and former franchisees, the better you can narrow down your list to a franchise that appeals to you.
Negotiate the Deal
Getting involved with younger companies that do not have a lot of franchise opportunities or experience is ideal if you want to negotiate a better franchising deal. These companies sometimes want to hear what potential franchisees have to say. Older companies generally do not negotiate their agreements, but it never hurts to ask. When negotiating, remember that the initial set-up fees are generally more negotiable than the ongoing royalty fees associated with a franchise. Also, trademarks are non-negotiable in a franchise agreement.
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