Nothing, zip, nadda. I’m paid by the franchisor if and only if you decide to buy into their business program and they do not get to charge you any kind of a premium for working with me. Our relationships are contractual with these franchisors and they know we’re bringing them well qualified, interested candidates. We make their development efforts a lot easier.

No, my engagements with any client are always at will. However, if you agree to work with me I do expect you to commit to the process of discovery and keep an open communication channel with me. Since you are not the person paying me, you have no financial exposure resulting from my assistance. That being said, I do ask for the courtesy of being notified if you are working with another broker or directly with any specific franchise companies. I don’t like to duplicate efforts or waste your or my time if you already have someone looking at specific business types or brands.

Investment requirements for purchasing a franchise differ tremendously based on the industry and the type of business the franchise operates. Total start-up costs can range from $20,000 or less to more than $1 million, depending on the franchise selected and whether it is necessary to own or lease real estate to operate the business. To learn more about the full costs of purchasing a specific franchise, use the International Franchise Association’s franchise opportunity search tool to find the franchise that will be the best financial fit for you. While it is possible to find a franchise opportunity that requires a lower level of cash liquidity, my experience has taught me that any client coming in with less than $50,000 of their own money will have a hard time finding a reputable and viable franchise opportunity. This liquidity can come in the form of cash, home equity or even a portfolio loan you take out against your non-IRA stock account. There are many more potential options, so let’s discuss.

The sooner the better. It is usually a good idea to start figuring out how you will be funding your business venture as early in the process as you can. Some funding options take time and you don’t want to miss out on an opportunity. One of the most important aspects of opening a franchise is funding. a franchise consultant I’ve developed relationships with a variety of lenders and financing brokerages that will help you leverage your good credit, your existing cash and financial assets to ensure you’re finding the best avenue for funding your business venture. All clients will need to invest at least 10% and up to 30% of their total start up costs in cash, depending on the type of financial vehicle you are using to fund your business.

Franchising your business can not only strengthen your company’s brand recognition and reach, but it can also help secure its future. Franchising provides business owners that have an established product sales or services business, which may already enjoy local/regional brand-name recognition, the opportunity to capitalize on their success nationally. I and my brokerage, The Franchise Consulting Company, have spent the last 3 years developing a comprehensive system of companies that will not only help successful business owners turn their model into a franchise opportunity, we will also help you successfully market your opportunity through multiple channels, manage the sales effort and even prepare you for an eventual exit. My goal is to become the first member of your franchise board of directors and serve as your long-term ally as you build out your franchise business, find great franchisees, and get your operations and royalty revenue to the point that your business is one that private equity investors want to buy out. Ask me about my Alloy program – there’s no one else out there that can offer you the kind of comprehensive ecosystem of service providers that I can.

Investment requirements for purchasing a franchise differ tremendously based on the industry and the type of business the franchise operates. Total start-up costs can range from $20,000 or less to more than $1 million, depending on the franchise selected and whether it is necessary to own or lease real estate to operate the business. To learn more about the full costs of purchasing a specific franchise, use the International Franchise Association’s franchise opportunity search tool to find the franchise that will be the best financial fit for you. While it is possible to find a franchise opportunity that requires a lower level of cash liquidity, my experience has taught me that any client coming in with less than $50,000 of their own money will have a hard time finding a reputable and viable franchise opportunity. This liquidity can come in the form of cash, home equity or even a portfolio loan you take out against your non-IRA stock account. There are many more potential options, so let’s discuss.

Not really. Look, by buying into a franchise concept you will absolutely be getting a huge head start toward the opening of a successful business when compared to starting your own business from scratch. But it’s hard work in either scenario, and both will cost you money up front. The difference is that franchising eliminates a lot of the unknowns and the headaches associated with starting your own company. You pay a franchisor up front for all of the work an independent business owner may have to pay 10+ vendors to help them accomplish. Franchises are streamlined, with proven processes, marketing and training programs. But owning any kind of business will require work, some long hours (at least initially), some risk and uncertainty. Franchising simply gives you the opportunity to know a lot more up front about what you can/can’t do and how you will do it. For many people that level of transparency and proven track record provides confidence in processes and ensures a more predictable outcome. For others who don’t want the restraints of a business system and franchise, it’s not a good fit. 

We represent a little over 10% (300 +) of the franchise opportunities in the North American marketplace. That may seem like a small number, but keep in mind that not all franchises are created equal. Taco Bell, KFC, MacDonald’s, Chick-Fil-a and the other big international brands have more franchise inquiries than they can handle. Of the 3000+ franchise opportunities out there, many are not that great. Our corporate leadership has hand-picked each franchise we represent to ensure they play by the book, have a solid support structure, viable business concept and no history of shady deals or franchisee lawsuits. We represent almost every franchise category available, from automotive services to children’s supplemental education to salon/spa/massage/lash lounges to food/hospitality to boutique fitness to home restoration and maintenance to senior care to entertainment. We have franchises that are a low as a $60,000 investment to as much as $5MM.

Visit almost any town in America today and on many streets you will find franchised businesses. One of the reasons that many franchises have been so successful is that, in franchising, a business synergy is created. Franchisees brought together under one trademark can achieve things that as individual business people they could not do. Group advertising, buying power and the sharing of ideas are some examples of what can happen. While there are many examples of successful franchises, buying a franchise is no guarantee of success. Before buying a franchise, 10 important questions need to be carefully and thoughtfully answered…

Some very careful self-analysis is important before buying a franchise. Indeed, your personal house should be in good order. One of the myths that has been perpetuated is that franchise ownership is easy. This is just simply not true! While the franchise system will give the start-up training and offer ongoing support, you, the franchisee, must be prepared to manage the business. While some franchises may lend themselves to absentee ownership, most are best run by hands-on management. You must be willing to work harder than you have perhaps ever worked before. Forty-hour weeks are also a myth, particularly in the start-up phase of the business. It is more like 60-to-70-hour weeks. You must also be willing to mop floors, empty trash, fire as well as hire employees and deal with upset customers.

Sometimes people buy a franchise they think will make them a lot of money, only to find later they do not enjoy the business. The adage, “know thyself,” certainly applies here. You should buy a franchise that centers in an area that you will enjoy for the next 10-15 years.

The very key to franchising success is the consistency of product and service customers find from one franchise to another. When you display the sign and logo of a franchise, you are indicating to customers that you follow a particular system. People who are extremely entrepreneurial in the sense that they do not like to conform to a predetermined formula should be very careful about buying a franchise.

Many franchised businesses are based on people relations. Your ability to interact well with your franchisor, other franchisees, your employees and your customers cannot be emphasized enough. A negative, critical franchise owner can be a detriment to the entire franchise system. You must have a track record of good relationships with employers, supervisors and fellow employees.

One of the major causes of business failure is under capitalization. While the franchisor will be able to give you a good idea of the start-up costs, sometimes these will vary due to leasehold improvements needs and other valuables. You will need enough money to not only open your franchise, but to run it until such a time as it is profitable. For some franchises, that may take a year. Remember, it is better to start out with more money than you think you will need rather than less.

Franchisors are required to prepare a document called the franchise disclosure document. This document will give you pertinent information about the franchise. It will also contain the franchise agreement that you will sign. This agreement will govern your relationship with the franchisor for the term of the contract. The disclosure document is a vital document. It should be studied very carefully and discussed with your lawyer.

You should get to know the principal directors of the company—their business background and how profitable their franchise has been. The disclosure document will contain this information. Have an accountant review the financial analysis of the franchise. Is it a solid company? Also, examine how long the franchise has been in business. A new start-up franchise may offer you the opportunity to get in on the ground floor. But it might also mean that the franchisor has not had sufficient experience to fully develop the system.

The disclosure document will contain a listing of all of the franchise owners. It would be worth your time to contact a number of them to discuss their experiences with the franchise. Has the franchisor followed through on commitments? Did the franchisees receive adequate training? Would they buy the franchise again? Is the business profitable? What advice would they give you?

One of the most important elements of a franchise is the ongoing support and contact you will have with the franchisor. For this reason, you should feel comfortable with the people you will interact with for a number of years.

Managing a franchise is a full time job. It requires great sacrifices of personal and family time. For this reason, your friends and family should understand that you will have tremendous demands on your time.

Advantages

Owning a franchise allows you to go into business for yourself, but not by yourself. A franchise provides franchisees (an individual owner/operator) with a certain level of independence where they can operate their business. A franchise provides an established product or service which may already enjoy widespread brand-name recognition. This gives the franchisee the benefits of a pre-sold customer base which would ordinarily takes years to establish. A franchise increases your chances of business success because you are associating with proven products and methods. Franchises may offer consumers the attraction of a certain level of quality and consistency because it is mandated by the franchise agreement. Franchises offer important pre-opening support: site selection, design, construction, financing, training, and a grand-opening program. Franchises offer ongoing support: training, national and regional advertising, operating procedures, operational assistance, ongoing supervision and management support, increased spending power, and access to bulk purchasing.

Disadvantages

The franchisee is not completely independent. Franchisees are required to operate their businesses according to the procedures and restrictions set forth by the franchisor in the franchisee agreement. These restrictions usually include the products or services which can be offered, pricing and geographic territory. For some people, this is the most serious disadvantage to becoming a franchisee. In addition to the initial franchise fee, franchisees must pay ongoing royalties and advertising fees. Franchisees must be careful to balance restrictions and support provided by the franchisor with their own ability to manage their business. A damaged, system-wide image can result if other franchisees are performing poorly or the franchisor runs into an unforeseen problem. The term (duration) of a franchise agreement is usually limited and the franchisee may have little or no say about the terms of a termination.

So you want to be an entrepreneur?

You’re not alone!

An entrepreneur is defined as:“One who pursues opportunity beyond the resources currently controlled.”“

A person who sees an opportunity and creates an organization to pursue it.”

“A dreamer who attempt to turn an idea into a profitable reality.”

“Anyone who assumes the risk and responsibility for starting and managing a business.”

“Anyone who takes the risk of starting a business for the purpose of making a profit.”

Entrepreneurs have a different way of looking at life…

Opportunity INSTEAD OF Security

Results INSTEAD OF Routine

Profit INSTEAD OF A Paycheck

Trying New Ideas INSTEAD OF Avoiding Mistakes

Vision INSTEAD OF Short-Term Gain

The advantages of being an entrepreneur…

freedom and independence

control over a major aspect of your life

an outlet for creativity

excitement

satisfaction and sense of achievement

self-esteem

status and recognition

flexibility

job security-you cannot be fired or laid off

unlimited income potential

growth of initial monetary investment

The disadvantages of being an entrepreneur…

risk

responsibility and pressure

fear of failure

obstacles and frustration

loneliness

more work

longer hours

less time or energy to spend with friends and family

less financial security

fewer job benefits

risk of losing investment

income fluctuation

you are responsible for your own portion of taxes and FICA

Questions to ask yourself…

Do you have the personal drive to be a successful entrepreneur?

Are you willing to work whatever hours it takes to make your business a success?

Are you willing to give up the perks of being an employee to invest and run your won business?

Are you self-reliant?Can you work without support?

Are you healthy?

Do you have the physical ability to meet the needs of operating on your own?

Can you handle stress?

Do you have the mental ability to meet the everyday needs of operating your own business?

Can you handle the crisis situations and deadlines?

Do you like people?

Do you listen well?

Do you have patience when working and interacting with others?

Do you communicate well?

Can you be a leader and a trainer for your staff as well as a front person for your business?

Can you maintain a positive relationship with the people who work for you?

Can you meet the needs of your customers?

Do you have the ability to seel-yourself and your products and services?

Can you afford to start your own business?

Do you have the support of your family and friends?

Once you have determined that you have the abilities, skills and desire to start your own business, you have to further determine if you have the requisite traits to become a franchisee.

Can you follow someone else’s rules, even when you think you have a better way?

Are you prepared to accept coaching and advice on how to run your business from a franchisor’s field and headquarter’s staff?

If the Franchisor turns down your great idea for changing the system, can you live with that?

Can you trust that a franchisor is working for the benefit of the entire system-even when their decisions do not necessarily go your way?

Are you willing to share your financial information and prepare required reports each month?

Are you willing, able and eager to learn new skills?

Can you set aside old habits and beliefs to follow a franchise system?

Do you know the franchisor? Have you spent enough time finding out about the franchisor from…

other franchisees?

the International Franchise Association

the franchisee’s owners association

the franchise advisory council

Can you afford a franchise?

How much do you have to invest?

How much can you risk losing?

How much do you need to live on?

What is the total investment required for getting into the franchise?

What portion of the investment can be financed?

Can you find anyone willing to invest in you and your future?

How much can you earn as a franchisee?

How long will it take to breakeven?

What return can you get on your investment?

Can you get a better return from another investment?

Are the risks equal?

Is your research thorough? (Have you researched the industry, the franchisor, the disclosure documents, and talked with current and former franchisees?)

Have you gotten the assistance of professional advisors who are familiar with franchising?

Have you made a slow and detailed evaluation of the opportunity to determine if you will meet your personal and financial goals?

Do you understand the terms of the contract?

Have you thoroughly read the FDD and the franchise agreement?

Have you had all your questions satisfactorily answered?

Have the promises which the franchisor made during the your discussions been included in the agreement?

Have you had a qualified, experienced franchise attorney review the documents?

Have you had a qualified, experienced accountant, familiar with franchising review the documents?

Are the franchisees happy with their investments?

Have you talked with and visited other franchisees?Have you worked at a franchise location to get a better feeling if this is the right decision?Have you contacted the franchise owners association and talked with the president?Have you talked with the director of the franchise advisory council?Does the franchisor have a history of litigation?Are other franchisees constantly bringing lawsuits against the franchisor?Is there anything about the franchisor’s litigation history that causes you concern?Have you discussed these concerns with the franchisor’s management and the leadership of the franchisee owners association or franchisee advisory council?Can you make enough money with this franchise?Ask other franchisees…Are you making money with the franchise investment?How long did it take you to breakeven?How long before you started to make money?Was the investment estimate the franchisor gave you accurate? If not, how much more money did you need?Was the estimated working capital accurate? How much did you need to have and how long before you could take money our of the business to live on?Are there mistakes you made ins starting up the franchise that cost you money? How can I avoid the same problem?Is the franchisor making money and where is the money coming from?If the franchisor has been in business awhile, is their business being supported by continuing royalties or is it coming mostly from initial franchise fees?Is the franchisor profitable?Is the franchisor on firm financial ground?Does the franchisor understand franchising?Does the franchisor have adequate staff, resources and trained personnel to meet its commitment to you?Do you feel the franchisor has the appropriate temperament to operate a franchise system?Does the franchisor staff attend seminars on franchising and management? DO they know about the latest changes in the industry? Are they active in trade associations for their specific industry and are they active in the International Franchise Association?Has the franchise been growing? Are new locations being added on a regular basis? How many locations closed in the last year? Why did they close?Are the sales within individual stores increasing?Does the franchisor have an active research and development department that introduces new products and services?Do the field staff act as consultants and advisors or do they act as police personnel (inspecting franchises and writing up violations, but not offering help and guidance?)

The best franchises are those with proven franchise business models and strong support systems that provide high-quality products or services that stand out from competitors. You can learn about the details of a franchise by researching its process to become a franchisee, reading its franchise agreement, speaking to current franchisees, and examining a franchise’s performance data in order to make an informed franchise business decision.

Like starting any business, buying a franchise involves risk. Although most franchisees are satisfied and successful, some do suffer financial losses. That’s why you must be particularly wary of any company that “guarantees” profit or certain success. If you hear a claim about a company that sounds too good to be true, it probably is. Investigation of all earnings claims made by a franchisor is especially important. Regardless of earnings claims, you must recognize that your success can come only through hard work. Success or failure ultimately depends on you.

To help mitigate the risks of buying a franchise, studies show that successful franchisees…

conduct their own marketing research

use their own financial and legal advisors

develop thorough marketing and business plans

have prior work experience in the industry