subject: Franchise Fitness: 3 Steps To Buying One [print this page] Many people dream of becoming their own boss some day. One way to gain entry as an entrepreneur is to buy a franchise. Today, even in this ever challenging economy, there are thousands of franchise opportunities and franchises for sale. According to the International Franchise Association (IFA), a report conducted by PricewaterhouseCoopers found that franchised businesses generate a significant amount of economic activity in the United States, and stimulate still more activity in non-franchised businesses.
This article presents four steps in buying a franchise and, within this context, recognizes two popular categories: restaurants for sale and gas stations for sale.
Step 1: You must be prepared to pay a franchise fee for the operation, and with this you will get a "formula" or system that has already been developed by the franchisor-company. You will have rights to use the franchisor's name and also benefit from their assistance in the form of: finding a location, receiving a standard operating manual and training, and advisement on marketing and management. Other support may come from a corporate website, newsletters, or periodic workshops, franchisee meetings and brainstorming sessions. For certain, reduced risk comes with buying an established company, yet the franchise fee can be substantial ranging from several thousand dollars to hundreds of thousands of dollars. Other costs include rent, equipment, start-up inventory, operating licensing fee, insurance and possibly a grand opening fee to help promote your business. You may also have to pay royalties to the franchisor based on a percentage of weekly or monthly income. Also, in addition to your own local advertising effort, you may have to pay into the franchisor's advertising budget.
Step 2: Before you invest, you have to select the franchise that is right for you. Considerations include: investment monies on hand, additional financing funds and the source of that money, desirability and capability to run a specific type of business. For instance, it is quite different if you're buying a restaurant or buying a gas station as different skill-sets are required. You also have to be good (no, great) at goal setting such as projecting/expecting a specific annual income and committing the hours you are willing to work. The restaurant business can be a daunting labor of love given the fact that you are dealing delicately with food and service, but the hoursnot the labormay be slightly more favorable than running a 24/7 filling station. There are definite pros and cons in both models.
Step 3: The demand for your business and the competition within your category of buying a franchise are as important as your capabilities in running it. Restaurant competition is fierce but also rewarding as most restaurateurs are in this business because they love to please people (sometimes a very hard thing to do). There is a certain temperament and personalityusually A typethat is a "given" in the restaurant biz. In contrast, the 24/7 gas station can almost run itself (not entirely, it needs you!) once fully supplied on the outside with gasoline and fully stocked on the inside with all the extra staple items that people need on the road or on the run when other stores have already put up their closed sign. Whatever direction you take in franchise opportunities the common bond or mantra in sustainability is: "Open for business."
