Buy A Franchise

Are you thinking about buying a franchise but you're not sure if the idea is a good one? Here are ten good reasons to go ahead and pursue your dream of owning a successful business.

1. Proven business: Opening a franchise comes with the advantage of knowing that this business has been successful in other locations. The idea and process of running this business have already been proven. Therefore the learning curve in operating the business can be virtually eliminated.

2. Lower risk: Risk of failure is lower with a franchise than starting a brand new business. There is a much higher likelihood of success if the same business has done well in other areas.

3. Established customer base: The brand name that comes with the franchise is already recognizable to consumers, without the franchisee (purchaser) having to spend a lot of money and time in establishing a new brand. The brand awareness provides security and trust to the customer who expects uniform quality to be provided. Therefore a customer base is already established.

4. Marketing: The franchisee can benefit from any advertising or promotion that the franchisor (owner of the franchise) does at the national or local level, without absorbing the cost. The franchisor can also provide input to the franchisee on a local marketing plan.

5. Initial and ongoing support: Training and support is usually part of the deal. Since the franchise company has a vested interest in how well you do, ongoing training, system upgrades, product enhancements, and question and answer resources are provided. The franchisor offers experience to franchisee in such areas as accounting procedures, personnel and facility management, and business planning.

6. Exclusive territory: Rights are exclusive for the territory, with no other franchises sold in the same area as competition.

7. Ease of funding: Many times obtaining financing for a franchise is easier since the franchise name and reputation are usually recognized by the lenders. Therefore, banks are more likely to fund the franchisee.

8. Purchasing power: Relationships with suppliers are already established; affording the opportunity to buy in bulk, enabling a great deal of savings for the business.

9. Pre-purchase information and research: The potential franchisee can make an informed decision because of information that can be obtained prior to purchase. The Federal Trade Commission requires franchisors to provide the franchisee with certain information including the company's history, information about the officers, litigation history, audited financial statements, the franchise agreement, and a current list of franchises with owners' names and contact information.

10. Solid economic niche: Franchises cater to consumers' specialized needs. Consumers tend to prefer doing business with companies that meet their specific needs and the franchise industry has been fitting the bill.

Whether you purchase a franchise in an existing location or take on a new territory, the investment can prove to be well worth your while. If you are looking for more franchise information there are many web sites that offer free contact information for many franchises. FranchiseInformation.us offers free contact information so you can contact the franchisor directly.

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Franchise businesses such as Wendy's, McDonald's and Jack-In-The-Box are booming. The people setting up franchise ideas and businesses know a good thing, and are really promoting this idea. Franchises for just about every conceivable kind of business are being sold in ever increasing numbers.

Some franchises are very good. They treat both the franchisor and the franchisee very well. Others are very one-sided. Still others are almost total rip-offs that trap one into paying ten to fifty times the actual value of the business idea, equipment, or what ever it is they are trying to get you to buy.

Before putting any money into a franchise, you should investigate everything completely. We've prepared a list of questions you should be asking, and should get satisfactory answers to before investing.

1. Has your attorney studied the franchise contract, discussed it completely with you, and do you both approve it without reservations?

2. Does the franchise require you to take any steps which are either illegal or even border on illegal, or are otherwise questionable or unwise in your state, county or city?

3. Does the franchise give you an exclusive territory for the length of the franchise period, or can the franchisor sell a second or third franchise in your territory?

4. Is this franchisor connected in any way with any other franchise company handling similar products or services?

5. If you answered yes to the above question, what is your protection against the second franchising company?

6. Under what circumstances can you end the franchise contract, and at what costs to you?

7. If you sell your franchise, will you be compensated for your goodwill or will it be lost to you?

8. How many years has the firm offering you the franchise been in operation?

9. Does the company offering you this franchise have a reputation for honesty and fair dealing among its franchisees?

10. Has the franchisor shown you any certified figures indicating exact net profits of one or more of its members, and have you personally checked the figures with these people?

11. Will the franchisor assist you with: a) A management training program; b) An employee training program; c) A public relations and advertising program; d) Capital; e) Credit; f) Merchandising ideas?

12. If needed, will the franchisor assist you in finding a suitable location?

13. Is the franchising firm adequately financed so that it can carry out its stated plans?

14. Does the franchisor have experienced management, trained in-depth?

15. Exactly what can the franchisor do for you that you cannot do for yourself?

16. Has the franchisor investigated you carefully enough to assure itself that you can successfully operate at a profit to both of you?

17. Does your state have a law regulating the sale of franchises, and has the franchisor complied with that law to your satisfaction?

18. How much equity capital will you need to purchase the franchise and operate it until your income equals your expenses?

If you can get the answers to each of these questions, and those answers satisfy you, then you're probably thinking about buying a pretty good franchise deal. However, if you're in doubt about any of these points, be sure to check it out and know the answers for certain before you invest or sign anything.

Buying a franchise can give you a measure of security, and in some cases, sure-fire profits. Business surveys show that fewer than 20 percent of all new franchised businesses fail. This is in comparison to a 60 to 80 percent failure rate for all new businesses started in this country each year.

Information regarding specific franchising ideas can be found in the franchising directories, which are generally available at the local library. Often there will be a notice posted in franchise outlets themselves.

If you can afford the entry into this business, statistics are on your side. You are now armed with some CAUTION and STOP and GO.

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