subject: Franchise Business Opportunities - 5 Tips In Finding The Right Franchise [print this page] Franchise Business Opportunities - 5 Tips In Finding The Right Franchise
Franchise business opportunities our unessential peace to the American fabric. Traditionally first-time business owners or first-time entrepreneurs get drawn to franchises because they bring a proven system in place and they usually already have the business plan and marketing plan done for them. It's probably a safe bet to say that the typical franchise owner is someone who may not necessarily have the experience nor the expertise to start a business from scratch and to keep it out of the 95% failure rate.
Franchise business opportunities provide a lot of value to the economy and in this article I'm going to break down and give you five tips in finding the right franchise for you and family.
1. The industry - What you are really looking for in a franchise business opportunity it is a business in an industry of growth. That means it can't be a industry that is mature or stagnant... It must have competition and it must have innovation. While doing your due diligence, look at the number of franchises that have recently opened and look at the number of franchises that have recently closed. These numbers should give you a good insight as to if everyone is jumping on board or if the rats are jumping off the ship.
2. Leadership - You might be wondering why the leadership of the franchise business opportunity is being talked about, but it's been my experience that the leadership of the company can ultimately decide the success or failure of the business. If the leadership is more concerned about fattening their own wallets, run and run fast like your hair is on fire. Most franchises will have good leadership but it's still very wise to find out everything you can about the entire leadership of the franchise.
3. Total cost to entry - The typical franchise business opportunity today will cost you roughly $250,000 and that doesn't even include the real estate you're going to need. On top of that, you usually have to have a high net worth, a good credit history and the down payment needed for the franchise must come from your liquid assets. For some entrepreneurs, this can be a little steep. Recently home-based or online franchise business opportunities have become quite popular as they usually don't cost quite as much as traditional franchises.
4. Territory restrictions - What most new franchise owners don't know is that you can negotiate your territory restriction with the franchise Corporation. It is wise to seek expert counsel and negotiate for everything that you can, especially the size of your territory. If the territory are looking at is not to your liking, negotiate for the lowest amount of time possible with that territory in your contract. On the flip side, if your territory is to your liking, negotiate for as long as possible with your contract.
5. Royalty fees - The typical royalty payments today range from 2% to 10% of gross sales, not net revenues. Once again, if you can negotiate your royalty fees, then that would be great. If you can't, conduct even further due diligence to make sure that your business can survive on $.90 on the dollar. This means that your profits must be calculated into this as well. Some franchises, like car wash franchises, have minimum royalty payments due no matter what happens with the business. Make sure you account for natural disasters, weather, etc.
