Monthly Archives: July 2012

Benefits and Responsibilities of Franchise Ownership

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Knowing how to start a business is important before getting into anything. One way to make money is by getting into a franchise. By investing in a franchise through paying a franchise fee, the franchisee has the right to operate that certain business. Essentially the investor will be given a proven system and the right to utilize the franchisor’s brand name for a certain length of time, along with assistance. Investing in a franchise could possibly lessen any risks when investing in a business, since the investor is putting money into a company that is already established. Keep in mind though that there are other costs on top of the franchise fee.

Below are the different Components in a Franchise System:

Learning how to start a business includes knowing about the costs involved. Usually, the franchisor will give the franchisee the right to use their name and will also provide assistance for a certain fee. These costs include an initial franchise fee, which is non-refundable, along with other expenses needed to establish the business. These expenses can consists of rent, construction, equipment, and initial inventory. In many cases, payment for insurance, operating licenses and a fee for grand opening has to be paid for. Other fees that need to be budgeted for are advertising fees and continuing royalty payment.

So that all franchise outlets are uniform, in most cases franchisors will control the way franchisees operate their business. For instance, they may want to pre-approve locations for the store, they will dictate the appearance or design of the outlet, they may impose restrictions on the services and goods offered by the outlet, as well as restrictions on the method of operation, and restrictions on areas of sale. In short they know how to best make money with their business so they want franchisees to follow suit.

Other rules apply as well in a franchise. For instance, the franchisee may lose their right to the business if the contract is breached in any way. In addition, these franchise contracts are only for a limited time period so there is no guarantee that the contract will be renewed after it ends. There are a number of reasons a franchisor can terminate the contract. For example, when royalties are not paid or if performance standards are not followed, then the franchise may be terminated and the franchisee will not be able to make money any longer.

There are some franchise contracts that can go on for a long period, like twenty years. However, when the contract ends, the franchisor might not renew it, as renewals aren’t an automatic thing. This is why it is always best to know how to start a business before getting into one.

Singing a Franchise Agreement

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Buying business franchise opportunities may take a long and arduous process of understanding the ropes of retailing businesses, selecting the best franchise investment, investigating the business background, and finally taking that step of faith to sign the contract and seal the franchise.

Perhaps the most crucial part of a franchise investment is signing the franchise agreement and making everything legal and official. At this point, there is no room for mistakes. A signed contract will be very difficult to amend once problems arise—it will take time, money and effort to correct mistakes. So it’s best to carefully study the agreement and consult experts before signing contracts for retailing businesses.

A disclosure agreement is subject to changes regularly. The document sent to the prospective franchisee may have changed by the time he is ready to sign it. Therefore, it is the responsibility of a franchisee to get the updated disclosure agreement before signing anything. The updated document contains the latest financial reports, any changes in management team, and the business’ financial performance report, among others.

Business contracts are long, technical documents that may be hard to understand, a franchisee is recommended to seek the assistance of a lawyer to review the stipulations and obligations written down. There are lawyers who specialize in retailing businesses.

The guidance of an accountant may be critical at this point. An expert eye is necessary to dissect the company’s financial reports, their earnings and projections. And help the franchisee draw out a business plan that best fits his investment capacities and goals.

For added protection, a franchisee may seek the analysis of a bank or any other similar financial institution. A third party viewpoint is unbiased and may offer the best recommendation for franchise opportunities.

It would be a franchisee’s nightmare to invest in franchise opportunities and find out after that several complaints have been filled against the business. Checking with a local BBB or Better Business Bureau office will give the franchisee information on any complaints about the services, products, or staff of the business.

Lastly, to fully understand the business rights of a franchisee, he may check with the local government office for franchise rules and other related documents that will serve as a business guide. The Federal Trade Commission (FTC) provides businesses with guidelines on how to operate certain services such as telemarketing sales and mail and telephone order, among others.

Make Money Owning A Spa Franchise

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While the majority of startup companies face failure within the first few years of operation, franchises with stable and winning business models significantly increase the chances for the franchisee’s success. There are bountiful franchises for sale that may be purchased by anyone looking to be their own bosses, and make money in large amounts consistently.

Regardless of the fact that franchises grant entrepreneurs greater chances for meeting financial success, choosing which type of franchise to purchase must be given careful thought first. Some businesses may be competing in an overly-competitive or even losing industry, which is something that should be avoided at all costs.

More importantly, the type of business engaged must be enjoyed by the owner. Out of the numerous franchises for sale today, a spa franchise would be one of the best purchasing decisions a businessman can make.

First and foremost, the spa industry is indeed highly in-demand and unswervingly growing – In 2009, over $12 billion dollars was generated by the US spa industry alone, and these figures have been increasing throughout the past few years.

Most people across the globe (especially in the US) are living fast-paced lives jam-packed with loads of stress and obligations. Being preoccupied with work and financially burdened at the same time makes it difficult for them to get on a plane and head on over to far-off Caribbean island to unwind for a week or so.

The basic need to relax and vent all the pressure built inside has grown so strong in almost everybody is what made spa franchises successful to begin with. Moreover, stress generated from daily regimens plus obligations have left visible signs on people’s faces and bodies. A spa can help reverse these symptoms through its products and services, which in turn can make any individual look better, and feel better about themselves.

The cost-effective solution to everybody’s biggest problem (stress) is the “main product/service” offered by spa franchises. Future franchisees will not only be placed in a position where they can steadily make money in bundles, but actually enjoy running the business in the process.

Spa owners get the privilege of availing all of the services plus goods offered by the establishment to help them unwind and look better themselves.

Franchises for sale which target the beauty and wellness industry are some of the best available today. They allow franchisees to make money (potentially in substantial amounts) through repeat business and enjoy the rejuvenating goods and services for themselves whenever they please.

The Difference Between Business and Franchise Opportunities

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The average employee often dreams about leaving his dull, repetitive job behind, and opting to buy a business establishment that practically runs itself. Many individuals new to the world of business have often heard about franchise opportunities and business opportunities.

While these two phrases may sound or appear closely related to each other, there are a few key differences between the two which makes each one unique. That being said, let’s take a closer look at the fundamentals of franchises.

First and foremost, the purchaser of a franchise is termed as the franchisee. The franchisee buys rights and methods to sell trademarked items plus services offered by the franchisor. The business model that’s utilized by the franchisor will be used by all of its franchisees to ensure consistency plus quality throughout all the franchisor’s branches.

Also, opting to buy a business of this nature means the franchisors will always exert or have the authority to exercise a weighty degree of control over all their franchisees operating methods. However, following a systematic and proven business model is what makes the majority of franchise opportunities “safe bets” to begin with.

With that said, let’s take a look at the fundamentals of business opportunities – the purchaser of a business opportunity will engage selling the business opportunity sellers’ products and services. The sellers will usually opt to help their purchasers find a suitable location to conduct the sales of their merchandises and services as well.

There are several differences between franchises and business opportunities – first off, franchisees get the benefit of adopting a proven business model which made the franchisors successful. On the other hand, business opportunity sellers let their clients run things according to their own personal likings.

Level of support rendered after the business has been put up is a key difference as well – while most franchisors offer special training for staff plus mobile or even personal assistance when problems arise for years to come, business opportunity sellers typically offer such services during the initial start of operation only.

Another thing worth mentioning is that franchises generally require their franchisees to adopt the same trademark logo, uniform, marketing strategies, building specifications, etc. to maintain uniformity. While business opportunity purchasers are required to sell the same products and services, they gain the benefit of creating their own logos, uniforms, marketing strategies etc. according to their own free will.

Lastly, franchise opportunities usually require larger startup capital, while business opportunities require less. The former is recommended for those new to the world of selling, who have bigger startup capital, and want to follow a proven system for making money.

For those looking to buy a business that grants the owner a greater degree of control over the entire company, business opportunities are recommended. However, being successful will require the owner to possess ample experience in the chosen industry for trade, even if the products and services are usually of good quality.

Investigating before You Invest

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Investors who are interested in putting money into automotive franchises should first obtain a copy of the disclosure document of the franchisor. There is a franchise rule that is implemented by the FTC that states that the document must be given to the investor at least fourteen days prior to paying or signing a contract. It is the investor’s right to ask for this document before agreeing to anything. All retailing businesses have this document and the investor must read through the whole document beforehand. Sections that are usually included in a disclosure document consist of the following below:

• A franchisor’s background that states the period of time the franchise has been in business, along with competition, as well as other special laws related to the business, such as permit or license requirements.

• A business background that includes the heads of the franchise as well as a description of the experiences they have.

• A litigation history that states past litigation. It also discusses information on whether franchisees have been sued by franchisors in the past. For instance, if a franchisor sues a franchisee for not being able to pay royalties, this may very well be a sign that the franchise is not successful seeing as the franchisee is unable to make such payments.

• A bankruptcy section that indicates if the franchisor or its leaders have been a part of a bankruptcy, along with data that allows the investor to see the financial state of the franchisor.

• A section on ongoing and initial costs that explains the expenses involved in opening and running a franchise.

• A part on restrictions that indicates the limits, which could possibly minimize the investors say in operating the business.

• A portion on terminations that states the conditions that the franchisor may terminate a franchise based on the contract rules.

• A training section that dictates the assistance and training program of the franchisor and an advertising part that has details on advertising costs.

• A portion regarding former and current automotive franchises and also information on associations of retailing businesses or franchises that run similar establishments.

• A section on the sample size as well as the percentage and number of franchisees who showed earnings at the amount the franchisor has claimed.

• A financials section that includes average income, which actually doesn’t say very much on how separate franchisees perform. It also states gross sales that don’t say a lot regarding the actual profits or costs of automotive franchises. There is also information on net profits.

• A part on geographic relevance, as income varies with geography.

• A portion on the backgrounds of the franchisees of the other retailing businesses.

• A section regarding dependence on earnings claims wherein franchisors may ask investors to sign a document regarding receipt of financial representations while purchasing a franchise.

• Lastly, a financial history portion that provides details on the financial status of the company, as well as audited financial statements.

Interim Healthcare Franchise Expands to Hawaii

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A recent announcement has been made that Interim Healthcare has gone into a franchise for sale agreement with Christian Sieber, in their effort to branch out in Honolulu, Hawaii. Interim Healthcare is the country’s top home care, healthcare and hospice staffing franchise. This expansion is a part of the company’s assertive campaign that is intended to boost its presence in the United States through time.

Christian Sieber said in a statement that he is very happy to be joining a company whose goal is to make certain that elderly individuals receive the dignity, respect, and attention they are entitled to. He also said that he is looking forward to providing service to the community in Honolulu and the PRH residents, along with enhancing the lives of all the clients whom they service.

In another statement, Interim Healthcare’s CEO, Kathleen Gilmartin welcomed Christian Sieber to the family. Before his stint at Interim Healthcare, Christian was employed in Germany in a certified geriatric nurse position. All in all, he has had over ten years of experience in the field of healthcare. In addition, he has founded Paradise Retirement Hawaii, which is a resort retirement living establishment for elderly individuals. In his hopes to continue in providing comfort to seniors in their homes, Christian looked for franchise opportunities in the healthcare industry. Now he is opening his initial Interim Healthcare franchise in the state of Hawaii before the end of the year.

Interim Healthcare has been in the business of providing care to patients along with their families since 1966. They are America’s original and optimum healthcare franchise for sale organization. At the moment, the company has over three hundred independently owned franchise opportunities throughout the nation. It provides work for thousands of healthcare employees that provide service to fifty thousand individuals on a daily basis. Interim Healthcare franchisees consist of home care for personal care and non-medical care, nursing, healthcare and hospice staffing services. The company is an expert in the healthcare industry with over a forty-six year history. Also, on the average, their franchisees have lasted an 18-year term.

Every Interim Healthcare franchise for sale is dedicated to enhancing the lives of clients and communities. There are various franchise opportunities that can be found all over the country. To be qualified, candidates must have at least a net worth of $400,000, along with a $50,000 minimum liquidity amount. The initial investment for franchisees is anywhere from $115,500 to $188,500, which includes the franchise fee.

Reasons For Becoming A Franchise Owner Today

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What are the reasons for an individual to acquire a franchise for sale today? Well aside from the advantage of becoming the big boss of a well-known business establishment, and having a set of employees who obey every command given, franchises are booming and are more inclined towards success as compared to companies built from scratch.

All types of franchises (such as those centered on retailing businesses) are predicted to substantially grow in the years to come, according to findings based on statistical studies conducted by the International Franchise Association’s (IFA’s) Business Economic Outlook.

The IFA Economic Outlook report made last 2011 contained some interesting bits of statistical data that’d easily serve as motivation for individuals to start saving up to purchase a franchise for sale. One attention-grabbing bit of info that’ll keep anybody enthusiastic about making that leap towards becoming a franchisee is an increase in economic output, with the gross value of merchandise and services a business produces predicted to increase for franchise business format lines.

Franchises engaging industries concentrating on automotive, personal services and commercial services are expected to reap the largest percentage increase in output.

Another good thing about owning a franchise is the fact that franchisees help create jobs for people. Hiring employees to work in retailing businesses, weight loss establishments, or whatever form of trade will allow more people to become better providers for themselves and family members.

In addition to the facts above, job creation is an excellent method used by economists and political leaders to strengthen the economy, making things better for everyone else as well. So yes – franchisees actually help fortify the economy, and even help improve the living conditions of all people living within the country.

Lastly, the number of franchises which can be purchased is also growing, making this type of business more acquirable for those who want to finally live the sweet life of being a successful entrepreneur. Many of the franchisors of certain industries (such as those which focus on lodging, automotive and retailing businesses) are predicted to recruit a lot more franchisees this year.

Purchasing a franchise for sale is one of the best ways for any person to become his own boss and make good money by following a structured business model that has been proven to be successful. Regardless of experience in business, franchisors are more than capable of providing ample training and assistance to newbies whenever problems arise.

Franchising: Owning Someone Else’s Trademark

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From a financial point of view, investing a lot of money as capital to buy a business can have its benefits and drawbacks. A franchise simply means renting out on another company’s products and ideas.It is actually earning out from someone else’s idea through the retailing business. With this strategy, investors don’t need to know how to start a business from scratch.

At some point, a person may dream of investing to buy a business. It can be a coffee shop, a clothing boutique, or even a simple hotdog stand. However, the downside of such a venture simply requires more of a businessman’s time and effort in finding out how to start a business. He has to build a brand before he can make some serious profit. This can pose a lot of challenges if the investor is still juggling a regular job and putting up a new venture.

It’s easier to buy a business franchise compared to starting out a trade from scratch. Franchising can be less complicated since the market strategy and business platforms are already thought out by the original marketers. Although it would seem like buying into an already branded venture, it can also seem like starting from scratch. The only difference is if the product, service or brand’s name is already known to the public. If the product or brand is well known, then it may be easier for the investor to make a profit.

There are simply a few things to consider in getting into a franchise deal. First of all, consider a company that has a proven track record of sales, stability and growth. Next thing to think about is if there’s already an established standard operating system on how the franchise works. Last thing to consider will be the contract lease.

In making an investment through a franchise, business thinkers must always dissect if the contract does favor them more in the long run. Some contracts only allow the franchisee to have the lease for only five years. And most of them leave the owners the option to choose whether or not the length of contract may be renewed after the term is over.

It is important to find franchise opportunities that have a negotiable contract, so that the capital which was invested in the venture can entirely return ten folds. Sometimes, contract renewal terms and prices go way up, compared to its original franchising value. Before signing the terms of the deal, have a lawyer with you, who can review the contract’s terms and conditions.

Owning a franchised business can have its perks and downsides. Regardless of both, pay special attention to calculating realistic earnings as well as the limits and restrictions of the business. Learning how to start a business will help you in running your venture.

Don’t Buy a Dead Franchise

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With the many franchises for sale, people looking to make money through businesses can statistically increase their chances of meeting success within their chosen industries. Though there are plenty of franchisors selling products that seem to click well with the target market, and may be doing so for the time being, not all franchise systems have been thoroughly developed for long-term stability.

Buying from a franchisor, which is still in the early stages of development, may put the franchisee at great risk. They may seem to have a golden strategy from the start, but even corporate members can may a series of bad calls which will eventually lead to their downfall, especially when they try to expand their product to different locations at an alarmingly fast pace.

In order for an individual to increase his likeliness to make money through business, reputable and established franchises for sale should be purchased instead. Franchisors that have been successfully competing in their industries throughout the years, and have a large number of successful franchisees under their belts, are usually the safest bets.

Now, in order for a franchisor to meet success in the first place, the corporation needs to go through a series of phases first. First step they take is to create a product or service that receives positive feedback (in terms of revenue generation and customer satisfaction) from their clients in their areas.

They then move on to putting up company outlets or stores in other local areas. As time progresses, and more positive feedback is received from all of their clienteles, further expanding the business (or products/services) is done through recruiting franchisees.

A system that teaches how to run their businesses successfully is used to educate these franchisees. The phase where training, mentoring, and monitoring the first 25 franchise owners is the most difficult phase of all, as it’s hard to predict whether the first batch of owners will be capable of running their businesses effectively.

But once the first 25 partners begin to make money in consistently large amounts, and has established solid stability, the franchisor may begin recruiting more franchisees at an accelerated (yet calculated) rate.

The franchises for sale which have reached this stage and beyond are usually the best to buy from. Of course, doing additional research to see how well they perform, in their given industries, will help further negate the risks of buying a franchise that’s bound to fail.

Burger King Grows through Franchise Ventures

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One of the world’s top marketers of burger and fries has now launched its venture by opening several hundred stores more across the globe. They did it through opening several franchise opportunities for investors. Over the past few years, even with other solid competitors in the market, BK’s outlets have grown 30% more in Russia alone. This is all due to their retailing business strategies.

Just recently, BK has made a $100 million partnership with Burger King Europe, VTB Capital and Alexander Kolobo. This would enable them to be shareholders, and to reach a target of over 300 BK restaurants all over the Russia.

Although this huge retailing business deal raised concerns for many participants, this is contrary to what McDonald’s Russia is venturing. It has been made public that only Rosinter, a franchiser of KFC and TGIF in Russia, was selected to market McDonald’s around the country.

The Burger King menu is now a very well received and accepted taste by many people, making the company very positive with their business strategy. The Russian buyers also have responded well to the quality of their products and food.

Though there are many financing options available, investors are more inclined to loan money from business partners. Why? It is because unlike banks from the West, Russian banks see ‘franchising’ as a risky investment, making lending rates higher by 10% or more.

Only one bank in Russia views it differently. Sberbank is now the only known major bank in Russia that provides a good credit program for potential franchise opportunities. They still have high lending rates though of 17.5 to 18.5 percent, however, applicants are not required to provide collateral. The bank has developed a Business-Start Program, which is in cooperation with the Russian Franchise Association.

This program has been a success and has already expanded to 57 cities. Although this program sounds very appealing to potential investors, it is exclusive to those who are still newbies in the business game. Out of the 500 loan applications, only four were granted credit.

Not that many banks in Russia have great offers like Sberbank does. Out of the 500 applicants, 200 of them walked away from the offer, but the remaining few stayed to renegotiate their terms. Until other banks in Russia see ‘franchising’ to be a less risky business strategy, lending rates will still be this high.

VTB, one of the major franchisees of Burger King, offered to help the Russian Franchisee Association in their endeavor to make banks understand the nature of the retailing business. This move can pave way for other banks to provide better financing programs, so that franchises can gain structure in Russia.