Do you want to start a franchise or buy an existing business? If YES, here’s a step by step guide to buying a franchise business with no money and no experience. No matter the level of economic downturn that a country might be experiencing, new businesses will still crop up regardless and a number of these new businesses will be franchises as most new entrepreneurs are looking to key into the franchise opportunities that are available.
Owning a business in the United States for some is regarded as attaining the American dream and franchising is seen as one of the fastest ways of attaining this dream.
However, no matter how much franchising might seem better than starting a business from scratch, it is vital that you take certain steps that will enable you buy a franchise that will be worth your financial resources and time because not all franchises succeed. However, a comforting statistic for franchises is that their rate of failure compared to new businesses is smaller.
5 Questions You Must Ask Yourself Before Buying a Franchise
It is not smart to buy into a business franchise without conducting a few investigations. A business may look attractive and profitable on the outside but it doesn’t necessarily mean that you are going to have a good experience when you buy into the business franchise.
In order to avoid unpleasant surprises, here are 5 important questions you must ask yourself before you buy into any business franchise.
- a. Do I Like Being a Franchisee?
- b. Can I Trust This Business/Franchisor?
- c. Can I Afford The Fees?
- d. What Is The Turnover Rate?
- e. How Much Can I Expect To Earn From This Deal?
- What are your standards for selecting a franchisee?
- i. Get a Passive Investor
- ii. Apply for Loan from a Commercial Bank
- iii. Apply for SBA Loans
- iv. Franchisor Assistance
- iv. Ask your Loved Ones for Help
- Step One – Self Evaluation
- Step Two – Work with a Franchise Consultant
- Step Three – Evaluate Industry Categories
- Step Four – Identify Individual Franchise Companies
- Step Five – Know What Franchise You Can Afford
- Step Six – Conduct due diligence on Selected Franchisors
- Step Seven – Contact Existing Franchisees
- Step Eight – Attend a ‘Discovery Day’
- Step Nine – Work with a Qualified Franchise Attorney in Studying the FDD
- Step Ten – Make your Decision and write a business plan
- Step Eleven – Sign an Agreement
- Step Twelve – Secure Funding
- Step Thirteen – Obtain all Necessary Permits and Insurance
- Step Fourteen – Hire Staff and Get Training
- Step Fifteen – Start your Franchise Business
- Buy a franchise in an industry you understand
- Buy a business franchise you are passionate about
- Buy a franchise whose products have huge market demand
- Forget the popular mass franchises, look for a niche franchise
- Can You Buy A Franchise With No Money?
- Can You Buy a Franchise From Someone?
- Can You Buy a Franchise With Bad Credit?
- Can You Buy a Franchise With No Experience?
- Why Do You Buy an Existing Business?
- What is the Total Investment Required for Getting into a Franchise?
- Should You Buy a Franchise or Start a Business from Scratch?
- What are your Financing Options to Pay for your Franchise?
- What is a Good Franchise to Buy?
- What are their Initial Investment Costs and Franchise Fees?
- Is It Best To Purchase a Franchise By Yourself, Or With Partners?
- Is It Better to Buy an Existing Business Or Start a New One?
- What is the Likelihood That a Franchise Will Bring You Repeat Business?
- What is the Disadvantage Of Buying a Franchise?
- What Does The Future Hold for the Franchise Concept?
- Is Buying a Franchise Profitable?
- How Do Franchise Owners Get Paid?
- What Franchise Can You Buy For 100k?
- Do You Need Savings or Additional Income to Live On While Starting Your Franchise?
- Do Franchise Owners Have to Work?
- Can You Buy a Franchise Without Liquid Assets?
- What Franchises Make The Most Money?
- Should a Franchise Ownership Be Your Main Source Of Income Or a Supplement to Your Current Income?
- What Franchise Can You Buy for $10,000?
- Is It Wise to Operate a Franchise Business Yourself Or Hire a Manager?
- Is It Possible to Set Aside Old Habits and Beliefs to Follow a Franchise System?
- What Does The Franchisor Use In Supporting Franchisees, Is It Continuing Royalties Or Initial Franchise Fees?
- How Can You Get a Million Dollar Business Loan?
- Do You Want to Buy a Franchise But Think You Can’t Afford It?
- What Support Does a Franchisor Offer?
- What are the Top 5 Franchises?
- What Kind Of Continuing Support Does a Franchisor Provide?
- What to Do If a Franchisor Turns Down Your Great idea for Changing the System?
- Can I Sue My Franchisor?
- What Happens to Cash in the Bank When You Sell a Business?
- 40. What is the World’s Largest Franchise?
a. Do I Like Being a Franchisee?
When you buy into a business franchise, you will have to lose some of your independence. You will have to follow the franchisor’s rules, principles and policies even though the business belongs to you. You will also have to accept the franchisor’s coaching and advice, and must be willing to share financial information and reports of your business with your franchisor.
If you are the type of business person who likes to be independent and make their own rules, then you have to carefully consider whether this is the best Business model for you.
b. Can I Trust This Business/Franchisor?
The hallmark of a franchisee-franchisor relationship is trust. No matter how you choose to see it, the fact is that the moment you buy into a franchise, you become the franchisor’s business partner and it is almost impossible to do business with someone that you don’t trust. Try to learn as much as you can about the company’s values, ethics, history and beliefs as well as those of its managers and core employees.
You should also find out if the franchisor has had any litigations with any of its franchisees in the past and if so, the nature of such litigations so that you can have a general idea of how the franchisor treats its franchisees.
The more you know what the business and its staff are about, the easier it would be for you to decide if you can trust them enough to do business with them or otherwise.
c. Can I Afford The Fees?
Most franchisers would require that you pay some money upfront as franchise fees. This is how they make their money. These prices differ and some may require that you pay as much as $100,000. Costs of support, training, software, equipment, franchise transfers, liquidation and royalties may or may not be included in the initial franchise fees.
You have to find out the exact fees you will be required to pay, and check your bank account to be sure that you can afford these fees before you begin the process.
d. What Is The Turnover Rate?
If many franchisees have been selling off their business units, or closing down in the past 1-2 years, it is an indication that there is trouble with the business because no one likes to let go of a good thing. It helps to take a deep look at the Franchise Disclosure Agreement to see what the turnover rates are; note how many new franchisees have joined in the past few years, and how many have left. It also helps to understand the reason for their exit by asking questions from other franchisees.
e. How Much Can I Expect To Earn From This Deal?
The major reason why anyone would want to buy into a business franchise is for the financial benefits, hence it helps to find out whether you will be able to make enough financial gains to recoup your investments within your desired time frame.
You need to know how long it will take for your business to break even, and how long it will take for you to start making profit. This is very important if you plan on borrowing funds to buy the franchise.
In addition to these 5 questions, it also helps to understand what your exit strategy would be in case things don’t work out according to your plans.
5 Questions You Must Ask a Franchisor Before Buying a Franchise
1. How did the Franchise Commence and What is the Background of your Managers?
It is really important that you ask a question like this so that you can be really conversant with the franchising company. Questions like; who were the founders? Where did they get the inspiration to start the business?
What are your standards for selecting a franchisee?
Franchisors characteristically have a list of qualifications and personality traits that are agreeable with their brand. It is imperative to examine these criteria and define whether you feel your personality and skill set fits within the system. This question is an all-important one because it gives you a clue into what the franchisee is really looking out for and his expectations.
What Amount of Money do I have to invest before I Can Get Started?
The preliminary investment for starting a franchise can vary from a few thousand dollars to over a million. According to the FDD facts, Item 5 of the Franchise Disclosure Document (FDD) points to the fact the primary franchise fee and Item 7 details additional start-up costs such as real estate, equipment, licenses, etc. Be sure to deliberate on these items in depth with the franchisor so that you would have a clear understanding of your investment and what you will need financially to get up and running.
How much liquid capital will I need to sustain the franchise until it breaks even?
This is a very potent question to ask as it puts you in a position where you know what you are up against, as well as what awaits you in front. Apart from the early start-up costs, franchisees need sufficient working capital for the first numerous months until the business hits gold, so it is imperative to find out the average amount of time it takes most franchisees to start spinning a turnover so that you can be financially prepared.
What are the current fees and how do your royalties and marketing fees work?
When the purpose of a thing isn’t known, abuse becomes inevitable. This is why it is vital to comprehend your ongoing financial duties to the franchisor, together with whether or not you are obligated to pay royalty or other ongoing fees such as for advertising. Understanding this is indispensable for managing the financial health of your business.
Is It Possible to Buy a Franchise With No Money?
Owning your own business isn’t a bad idea, but what keeps people from ever achieving this is the dearth of finance as franchise opportunities require cash in order to be actualized. The fact that an entrepreneur doesn’t want to use his or her money to buy a franchise business does not mean that they don’t have money of their own; it might just mean that their cash is tied somewhere else and they therefore require money from other sources to fund the franchise.
Before you can however buy a franchise with or without capital, it is expected that you have conducted a thorough survey of the industry you intend going into. Once you have known what sector is likely to bring out the passion in you, you must then find out about their franchise capabilities and how they likely align to your own goals and objectives.
Ensure that you engage the services of an attorney to help you draft contract documents that will ensure that the deal is properly structured.
There are few case scenarios where you might likely buy a franchise without having to use your own money; but one criterion by which this can be achieved is ensuring that you have written a comprehensive business plan that will convince those you are looking to get money from to invest in your business. Below are some of the ways you can buy a franchise business without having any money.
i. Get a Passive Investor
There are many individuals in existence who have the money, but don’t want to put in the work and yet want their money to generate income for them. These are the kind of people who are likely to provide you the finances to buy a franchise
However, you will need to convince the investor that putting up the money you need for the franchise will bring them financial benefits within a definite period of time. This sort of option is a win-win because not only will you get someone to invest their own funds in buying you a franchise, but you also get a stake of the business as well without being in debt.
ii. Apply for Loan from a Commercial Bank
Even though banks do not like lending money to start-ups, there are certain businesses that banks cannot help but loan to regardless of their life-cycle and this is due to the projected and predictable revenue that the business is likely to generate. Therefore, it is important that you ensure that before using this option, that the proposed business will generate a steady stream of revenue that will allow you to pay back the loan in no time.
iii. Apply for SBA Loans
This is a loan program that is backed by the government where every year millions of dollars are issued out to various lending agencies so that those who are looking to start a new business, buy a franchise or buy an already existing business can do so.
There is however a limit to how much can be borrowed and there are also certain conditions attached before you can be deemed worthy enough to be loaned money. First, you must have a credit score that is over 680, a well written business plan and in some cases some collateral.
iv. Franchisor Assistance
This is one of the best places where you can get the money you need to buy your franchise especially in an economy that has experienced economic downturns. Search for franchises where the franchisors offer debt financing that will back the entire loan.
Ensure that you however check with the franchisor regarding any specific terms and what the repayment schedule would look like. Asides from lending you the money themselves, some franchisors who have long been in the game may have developed relationships with franchise finance companies or companies where borrowers are matched with lenders in order to ensure that you are able to buy a franchise with no money.
iv. Ask your Loved Ones for Help
In order to get your franchise up and running, you might consider seeking help from friends and family members. These sources can be easily convinced than others when it comes to getting your startup capital to buy a franchise. You should however note that financial help from family members and friends are likely to come with a string and it would be best if a document is drawn up in order to formalize any agreement reached.
The fact that you have no money at hand does not in any way mean that you should give up on becoming an entrepreneur. One thing to however note when looking to buy a franchise with no money down is that you must thoroughly research the franchise you intend acquiring, to find out how it would benefit you financially. Below is a step by step guide to buying a franchise in the United States of America.
15 Smart Steps to Buying a Franchise Successfully
Step One – Self Evaluation
Before you even think about starting a business, you need to ask yourself what you are looking to achieve by doing so. This self-evaluation step is critical because running a business can be very tasking if you evaluate the hours you will put in to make your business profitable enough so that you can recoup your investment. Critically evaluating yourself will allow you to know what sort of business you will be suitable enough to run.
It will also allow you understand what your strengths and weaknesses are. Where you intend to locate your business, where you live, why you intend buying that particular franchise as well as what exit strategy you have are all important when evaluating available franchise opportunities. Also, you will need to know if you are one that can work with business methods that have already been pre-established with little or no variations.
Step Two – Work with a Franchise Consultant
A franchise consultant is one that has a thorough industry-specific knowledge that will therefore help you understand complicated business issues. This step is optional but necessary especially if you need someone to guide you through all the confusing information that you might have gathered.
Step Three – Evaluate Industry Categories
Before you get to pick any individual franchisor, it is important that you thoroughly evaluate all the industry categories. It is your impression of these categories that will enable you determine if an industry’s category will be right for you before looking to research on the individual companies in that category.
Step Four – Identify Individual Franchise Companies
Once you have chosen the right industry category, then it is time that you look at individual companies to determine which would most likely suit you based on attractiveness, brand and location. Take your research further by searching for negatives about the individual franchise companies which you have chosen.
Step Five – Know What Franchise You Can Afford
Once you have started researching on the franchise opportunities available, it is essential that you know how much your overall investment is likely to be. Some franchisors advertise an initial investment, what that means that the amount is not all you will be required to invest as there will be other costs that you will be expected to cover such as legal fees, working capital, supplies and build-out costs.
Ensure that before making any down payment that you have a list of all the items that you will be making payments for and then make a payment once you are comfortable with the idea.
Step Six – Conduct due diligence on Selected Franchisors
Once you have selected the few companies that you feel align with your overall goals and objectives, then it is important that you make contact with these companies in order to get basic information about their franchise opportunities. The contact might be via their website or physically to acquire the materials you need.
Evaluate all the information you got from the various companies that you have contacted in order to determine if the new information acquired still aligns with yours. You should not bother committing time to those that do not completely align with your intended goals and objectives.
Step Seven – Contact Existing Franchisees
While trying to narrow down on which franchise company to work with, you can get vital information from already existing franchisees as they are in the best position to tell you about the business and what they think of the franchisors. It is from these franchisees that you will find out if your cost projections are realistic, how long it took for them to be profitable, and the effectiveness of the marketing materials provided by the franchisor.
Franchisors that offer the right amount of support and training to their franchisees should have leverage over those that don’t. Ensure that you talk to at least 10 existing franchisees either through phone calls or a visit as their various addresses can be found in their FDD.
Step Eight – Attend a ‘Discovery Day’
Once you have completed all the steps listed above, you should pay a visit to the franchisor’s headquarters as you will be able to get any bugging questions answered and will also meet people who will tell you how they intend to get your business up and running. It is important that you feel comfortable and also confident about the company that you are looking to start a business under.
You should also know that the visit also means that the potential franchisor is also evaluating you in order to know if you will fit in perfectly with their company as well. You should also know that there is a likelihood that other potential franchisees might be attending as well.
Step Nine – Work with a Qualified Franchise Attorney in Studying the FDD
If you are serious about buying a franchise, then to cover all legal ends, it is best that you consult with a franchise attorney who specializes in franchise law to help you understand what will be expected from you and from the franchisor.
You need to study all the available documents especially the Franchise Disclosure Document (FDD) before signing the franchise agreement. The FDD usually contains thorough information about the franchise, history of the company’s management, names and contact of the current franchisees, any litigation that the company might have experienced, other costs, type of training that will be offered by the franchisor, as well as a copy of the franchise contract.
Step Ten – Make your Decision and write a business plan
Once you are done with all your research, then it is time that you decide what franchise system you will be looking to invest in and then write out a comprehensive business plan so that you will be able to present it to potential lenders especially as you will need a substantial amount of money to not only buy the franchise but to also cover expenses till your business starts turning in profit.
Also, creating a business plan will not only ensure that you are able to secure funding for your business but the business plan will act as a guideline for how you will run the business especially when it comes to taking certain actions and making certain decisions.
Step Eleven – Sign an Agreement
It is vital that you sign an agreement in the presence of a qualified franchise attorney who will go through all the documents on your behalf. Some franchise documents are rigid, while others are more flexible.
That a franchise agreement is rigid does not mean that it won’t be to your best interest; however, there are certain terms that the franchisor must be willing to negotiate and in such situations, your attorney should be able to help you out as regarding the best solution for you.
Step Twelve – Secure Funding
There are various financing options available for any entrepreneur looking to start a business to consider. Even though you might have a convincing business plan with which to convince investors, it is essential that you have funds of yours as well as this tells potential investors how serious you are about your business.
Step Thirteen – Obtain all Necessary Permits and Insurance
It is necessary for you to understand that every industry has specific permits and insurance for businesses that intend to operate within it and they vary depending on the state or city that you will be operating your business from.
Your franchisor will have all the necessary knowledge of the permits and insurance that you need in order to run your business without hitches. To be doubly sure, ensure that you still crosscheck with local authorities regarding what you might need.
Step Fourteen – Hire Staff and Get Training
The number of staff that you will hire will depend on the type of franchise that you are running. However, regardless of how many staff you intend to hire, your franchisor will offer both classroom and practical training to the franchisee and its managers.
Step Fifteen – Start your Franchise Business
Even though franchisors usually have defined processes as regards advertising and promotion; you will still have to do your own bit in promoting your business in order to alert new customers of your presence.
3 Tips to Starting a Franchise Business Successfully
Buy a franchise in an industry you understand
Never buy a franchise simply because you want to buy one. Never buy a franchise because it is always in the media and seem popular. Buy a franchise in an industry you understand. The principle of business remains the same regardless of country, industry, economic situation, etc.
What differs is the industry challenges and technical aspects of a particular business. So it is advisable you purchase a franchise in an industry you understand its modus operandi.
Buy a business franchise you are passionate about
Passion is very important to the process of starting a business. In fact, I believe that nothing beats passion. So go for a franchise in a business that you are passionate about. With passion, you will have the boldness to be creative, innovative and face your business problems squarely.
Buy a franchise whose products have huge market demand
The fact that a franchise is popular in another state or country does not guarantee that it will be successful in your own region. Also, the fact that a franchise is very affordable does not make it a good one. So a good rule of thumb is: Do your own local market research? Don’t rely on the research analysis or feasibility report of the franchisor or selling company.
Forget the popular mass franchises, look for a niche franchise
Before purchasing a franchise, it is important you invest time to do your own research. You must look beyond the popular mass appeal franchises because they are quite expensive, saturated and the competition is stiff. Examples of this big saturated franchise industry are fast foods, restaurants, coffee shops, etc. Instead, look for niche appeal franchises like car wash, laundry, taxi service, food cart business, etc.
Frequently Asked Questions
Can You Buy A Franchise With No Money?
It is not possible to buy a franchise without money. You’ll need to pay an initial franchise fee, and you will have other start-up costs to contend with. Furthermore, franchisors want to see that you have some stake in the game in the form of a down payment.
Can You Buy a Franchise From Someone?
When opening a franchise, you can either open a new franchise location or you can purchase an existing franchise location. By buying an existing franchise, you could have a proven successful business instantly in place with regular customers and a good cash flow. Because the business is already operating successfully, it will also be easier for you to get financing.
Can You Buy a Franchise With Bad Credit?
Yes, it’s possible. Bad credit isn’t an automatic denial. By creating a plan and showcasing that plan to the important parties in your franchise ownership, you can set yourself up for success now and long into the future.
Can You Buy a Franchise With No Experience?
With franchising, a lack of industry experience is no barrier to entry. Of course, some franchises will require industry experience, especially if it is one where qualifications are required in order to trade, but this represents the minority.
- Where is the Best Place to Buy a Franchise?
These states were chosen based on the strong economy and growing job market they have. Some of the best places to start a franchise in the United States are;
- North Carolina
- What are the Advantages of Buying a Franchise?
Buying a franchise can be a viable alternative to starting your own business. Listed below are some advantages of buying a franchise.
- Franchises offer the independence of small business ownership supported by the benefits of a big business network.
- You don’t necessarily need business experience to run a franchise. Franchisors usually provide the training you need to operate their business model.
- Franchises have a higher rate of success than start-up businesses.
- You may find it easier to secure finance for a franchise.
- It may cost less to buy a franchise than start your own business of the same type.
- Franchises often have an established reputation and image, proven management and work practices, access to national advertising and ongoing support.
- Can You Buy an Existing Franchise?
Yes. In fact, purchasing an existing franchise can set you up for success by offering a quick return on investment.
- What are the Pros and Cons of Buying an Existing Franchise?
- Brand Reputation: If you are buying an existing Franchise then local brand engagement and reputation has already been created by the previous Franchise owners.
- Ready Customer Base: With a running Franchise, you need not worry about customers. They are already engaged with the franchise.
- Trained Staff: An existing Franchise will also have trained staff. There is no need for you to train them from scratch, since they will be well-aware of the business.
- Clear Expectations: You will have an idea about the actual revenue of the Franchise, which helps in deciding if you are to stick to the same marketing plan or to make improvements.
- Immediate Returns on Investment (ROI): You are in a revenue earning environment as soon as you complete basic training and take over the business from the previous Franchise owner.
- Resistance from Customers: There is no guarantee that the existing customer base will take kindly to a change in ownership, especially if it is a customer-facing business like an eatery.
- Issues with Existing Staff: Similarly, the staff would be in alignment with the previous owner and may have apprehensions about a change in ownership.
- Dealing with Old Issues: If the previous Franchise is working well and you are buying it, then you have an advantage. If not, initially, you have to deal with old issues.
- Change of Terms and Conditions: The Franchisor terms and conditions may not remain the same when you buy an existing franchise. You may have to renegotiate with the fees and terms again with the franchisor.
Why Do You Buy an Existing Business?
Buying an established business means immediate cash flow. The business will have a financial history, which gives you an idea of what to expect and can make it easier to secure loans and attract investors.
What is the Total Investment Required for Getting into a Franchise?
The cost of entry varies greatly, by both the segment you choose and the franchise brand you select within that segment. While costs range from less than $10,000 to upwards of $5 million, the majority of franchises run from about $50,000 or $75,000 to about $200,000 to get started.
Should You Buy a Franchise or Start a Business from Scratch?
If you are on the fence about opening and starting your own business from scratch, you should know that opening a franchise can be a safer route to travel down. When you are an entrepreneur, you are often left to your own devices to find solutions for problems, and you can run into some unpleasant surprises along the way.
What are your Financing Options to Pay for your Franchise?
- Franchisor financing
- Commercial bank loans
- SBA loans
- Alternative lenders
- Friends and family loan
What is a Good Franchise to Buy?
Clearly, determining whether a franchise will be good for you is a subjective activity. But with that in mind, there are several franchises out there that meet all those general requirements of a good franchise, and which are well worth looking into.
- 7-Eleven Inc
- The UPS Store
- Anytime Fitness
What are their Initial Investment Costs and Franchise Fees?
- Initial investment cost: $37,200 to $1,635,200
- Franchise fee: $25,000
- Initial investment cost: $1,008,000 and $2,214,080
- Franchise fee: $45,000
- Initial investment cost: $109,700 and $1,637,700
- Franchise fee: $40,000
The UPS Store
- Initial investment cost: $137,849 – $566,585
- Franchise fee: $9,950 to $29,950
- Initial investment cost: $62,900-$279,300
- Franchise fee: $25,000 to $42,500
- Initial investment cost: $3,985 – $51,105
- Franchise fee: $1,000
- Initial investment cost: $200,000
- Franchise fee: $10,000 and $30,000
Is It Best To Purchase a Franchise By Yourself, Or With Partners?
Going it alone will certainly give you full autonomy and control over your business, but a partner may allow you to expand into a more dynamic approach. Many franchise business owners look to expand after opening their initial locations, but going it alone can prove difficult, both in terms of finances and operations.
Also keep in mind that sharing your franchise business with one or more partners opens the door to potential complications, so you need to be wary of these.
Is It Better to Buy an Existing Business Or Start a New One?
If you’re worried about the difficulties involved in starting a business from the ground up, you might decide that buying an existing business is a better fit for you. When you buy a business, you take over an operation that’s already generating cash flow and profits.
You have an established customer base and reputation as well as employees who are familiar with all aspects of the business. And you don’t have to reinvent the wheel—setting up new procedures, systems, and policies—since a successful formula for running the business has already been put in place.
What is the Likelihood That a Franchise Will Bring You Repeat Business?
It all depends on how the business was operated initially. If it was run properly, then you can be guaranteed to have repeat businesses. If it does not, then you can create your own repeat customers in the following fashion;
- Start a loyalty program
- Offer personalized customer service
- Give out future-use coupons
- Get customers’ contact info
- Offer some freebies
What is the Disadvantage Of Buying a Franchise?
These are the few disadvantages of buying a franchise;
- Less flexibility than running a business on your own.
- Except in rare instances, you must share profits with franchisor.
- Set rates for certain business expenditures.
- Business reputation is somewhat dependent on others who also run the same franchise.
- Franchisors, by and large, hold the majority of the renewal power.
What Does The Future Hold for the Franchise Concept?
Over the long haul, franchise businesses, just like the stock market, have proven to be among the soundest investments. Even in the most challenging economic climates, such as the great recession of 2008-2010, the franchise industry weathered the storm better than virtually every other retail segment and has bounced back to new highs.
Is Buying a Franchise Profitable?
Franchising is like other businesses. You have to plan, initiate and sweat to make it profitable. But your chances of success is higher comparative to starting from scratch.
How Do Franchise Owners Get Paid?
The royalties a franchisor receives is the true element in which most franchisors make their money. The royalties a franchisor receives will be defined in the franchise agreement but will normally come in the form of a fixed flat rate or a percentage of gross or profit from the franchisees business unit.
What Franchise Can You Buy For 100k?
There are loads of franchises you can get for 100k. They include;
- Cruise Planners
- SuperGlass Windshield Repair
- Dream Vacations
- Dickey’s Barbecue Pit
- Expedia CruiseShipCenters
- Jimmy John’s Gourmet Sandwiches
- Property Management Inc.
- Naturals2Go Vending
- Home Helpers Home Care
- Always Faithful Dog Training
- Merle Norman Cosmetics
- Young Rembrandts
- Chem-Dry Carpet Cleaning
- Brazzen Rural Products
Do You Need Savings or Additional Income to Live On While Starting Your Franchise?
Making money from a franchise doesn’t take long at all if you buy a business that is already generating cash flow, net profit and has working capital and still has potential for a big upside. But if you didn’t get this type of franchise, you would need money to live on before your franchise starts generating money.
Do Franchise Owners Have to Work?
When it comes to running a franchise, you are actually the business owner and you can hire people to deliver the service or sell the products; you don’t have to do all of that by yourself.
Can You Buy a Franchise Without Liquid Assets?
Your own contribution is a requirement when it comes to franchising, and it often renders many entrepreneurs incapable of having access to funding. The requirement is usually that the potential franchisee provides a certain percentage their own contribution towards the setup costs of the franchise business and then the balance of the setup costs is financed.
But what happens if you do not have access to sufficient capital in order to provide the required own contribution? Here are methods you can leverage on;
- Soft loans
- Taking on a business partner
- Joint venture agreements
What Franchises Make The Most Money?
- Technical consulting: These franchises have an investment in the $60,000 range, and top 25% of franchisees earn over $600,000.
- Senior Care: Senior care is a very hot market right now, and there are single senior care territories doing 30 million dollars a year. Some brands have single unit averages of over 1.5 million dollars a year.
- Staffing: Average revenues in one system are over 6.4 million dollars.
- Cleaning: Several cleaning franchises have average revenues of over 1 million dollars a year.
- Cleaning master franchises: This is a relatively unknown niche, and it is where owners obtain cleaning contracts, then sell the contracts to franchisees for amounts ranging from $1,000 to $10,000. Some systems see an average of 2.4 million in average gross revenue.
- Food franchises: There are some that, for a reasonable investment, can generate million dollar revenues.
Should a Franchise Ownership Be Your Main Source Of Income Or a Supplement to Your Current Income?
Something that is possible with franchise ownership that may not always work with a start-up business is the ability to maintain your career while you run your business. But as with other businesses, it is not safe to make your franchise your main source of income because the business is still upcoming. The franchise needs to acquire a solid financial base before you start heaping financial burdens on it.
What Franchise Can You Buy for $10,000?
- MOMLETA (Baby Boot Camp)
- Coffee News
- N2 Publishing
- POOP 911
Is It Wise to Operate a Franchise Business Yourself Or Hire a Manager?
This should depend on your abilities and capabilities to run the business. If you have the time and skills, you should by all means operate the business by yourself. But if not, seek a manager. But as your business grows, know that you will need some help. You can’t do everything by yourself.
Is It Possible to Set Aside Old Habits and Beliefs to Follow a Franchise System?
Yes, of course. If you really want the franchise bad enough, you’d do all it takes to make the business work out. And who says you cannot change old habits and mindsets?
What Does The Franchisor Use In Supporting Franchisees, Is It Continuing Royalties Or Initial Franchise Fees?
Ongoing Royalty payments are typically paid to the franchisor to stay current on technological advances, as well as to enable the creation and marketing of fresh products and services. Also, these payments are used to pay expenses that are incurred at the franchisor’s headquarters, such as rent, utilities, and employee compensation.
Recurrent royalty fees are contributions made to the entire organization. The payments are used to maintain the system and ensure that all avenues flow smoothly between the franchisor and franchisee.
How Can You Get a Million Dollar Business Loan?
Banks, credit unions and online lenders frequently offer loans up to $1 million to established businesses. The Small Business Association (SBA) also backs loans of $1 million, but to apply for funding, you will need to submit an application through an SBA-approved lender.
Do You Want to Buy a Franchise But Think You Can’t Afford It?
It is possible not to be able to afford a franchise. Most experts recommend that a prospective franchise buyer brings to the table 20% to 25% of the total investment for their franchise. As an example, if you only have $60,000 to invest, you shouldn’t consider anything over $200,000. For your investment budget, that would be considered a high-capital franchise.
What Support Does a Franchisor Offer?
- Financial Assistance
- Selecting a site
- Initial training
- Ongoing Training
- Guidance, support and assistance
- Marketing and advertising
- An all-inclusive programme
- Reducing Supply Costs
What are the Top 5 Franchises?
- The UPS Store
- Hampton by Hilton
What Kind Of Continuing Support Does a Franchisor Provide?
The range of ongoing support may include monitoring the progress of the business by reviewing financial and other data provided by the franchisee and by regular contact with the franchisor. Some franchisors provide ongoing support with back office functions such as invoicing and credit control.
Franchisors may provide support to franchisees with customer leads or provide a central call centre. The franchisor can also provide support with social media and online marketing.
What to Do If a Franchisor Turns Down Your Great idea for Changing the System?
Most franchise agreements give franchisors the power to change things, but not all franchisors do that. In this case, you can’t do much because you signed the agreement to abide by their terms. You can opt out if things don’t seem to go the way you envisaged initially.
Can I Sue My Franchisor?
On one hand, the answer is yes; you can sue anyone for anything at any time – it doesn’t mean you’ll win or that the case will go anywhere, but you can. If your franchisor doesn’t perform as promised or if you later feel you were lied to or misled, it’s likely that your only recourse will be to hire an attorney and file an expensive lawsuit.
What Happens to Cash in the Bank When You Sell a Business?
The terms of the sale agreement should specify what will happen to the cash. Cash is an asset of the business, just like inventory. Cash in the bank belongs to the business, so technically it belongs to the new owner, however at closing there will be an accounting done by the lawyers. The result of the accounting will determine where the cash goes.
40. What is the World’s Largest Franchise?
McDonald’s is the world’s largest franchise network with an incredible $89 billion in global sales. Despite increasing competition, it has held on to this spot every year since the rankings were first released in 2000. To put this size into context, it is larger than KFC, Subway and Burger King combined.