Tag Archives: buy franchise

Franchisor Lending Assistance, Yes Or No?

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As years go by, more franchise systems are making use of lending programs to encourage financing and entice people to buy franchise despite the difficult times the lending environment is going through and the increasing demands to stimulate growth. However, such move is not a prudent tactic for everyone, according to Infinity Franchise Capital’s vice president of franchisor Sharon Soltero.

During the Franchise Finance & Growth Conference at the Four Seasons in Las Vegas, Soltero began her talk by telling those franchisors, or anyone who advertise franchise opportunity, that they ought not to do lending programs. Having worked on said programs herself, she related on how the process can be very stressful, difficult, and time consuming. She mentioned, in fact, that these programs require up to three months to get things started for both franchisee and those who buy franchise.

Soltero also gave further tips for those who still insist on using lending programs. For instance, franchisors must confirm if they are legally allowed to make use of such programs or determined enough to be able to implement it. She related how many franchise opportunity sellers, whom she worked with in the past, became quite interested in the program but eventually changed minds after going through the difficulties. These include problems in the loan contract, legal concerns, and convincing the company’s board.

In order for such programs to be successful, franchisors are advised to ensure loan guarantees. Such strategy appeases lenders and increases the program rates, both of which consequently improve participation and ensures the program’s success. Furthermore, franchisors committed to loan guarantees tend to exert more effort in making the program to function as intended.

Despite the aforementioned troubles that accompany lending programs, some benefits can also be had. For example, Burger King’s program helped boost the fast food chain’s remodeling program. Denny’s, on the other hand, went through a significant kick start development when its lending program—amounting to $40 million—aided its franchisees to convert 140 restaurants located in Flying J Travel Centers. To cap it all, the lending program is a great tool in solidifying the relationship between franchisor and those who buy franchise.

If franchise opportunity sellers want to reap the benefits of lending programs, they must certify that the programs are going to be used, monitored on a daily basis, and have a solid contractual agreement. Soltero related how the lending programs she had been involved with never lost a dime because they were done correctly with full commitment from their franchisors.

Is There a Limit to How Many Franchises You Can Own?

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The benefits of franchising are its low priced capital yet at the same time earns sizeable income or profit. This is the reason why most restaurants love franchising. Although a franchise opportunity is a good business, some franchisors still think they need to operate on other locations to keep their credibility and earn more franchisees. Other continues to buy franchise and operate in different areas to check out new concepts that may or may not work for them.

Despite the number of units a franchisor own, the big question still remains and that is how much is the percentage profit of the company ownership? Some restaurant executives claimed that you’ll only know the amount once you know it. Confusing right? A conference in Four Seasons Las Vegas was held, “Franchise Finance & Growth” where most of the panel present in the conference were restaurant executives and they indeed claimed that the percentage is not done in magic. This was in fact said by Jim Greco who was the previous owner of Sbarro and Bruegger’s.

Most successful franchisors have long been unloading in different locations such as the famous Applebee’s or the Burger King. On the other hand, there are some franchisors who still believed to buy franchise based on percentage. According to the chief executive officer of Wingstop which is based on Texas, the practice of holding on to an owned franchise is not really needed. Charlie Morrison thinks that franchisors need to explore other places to check and better understand variables of other market consumers and its locations.

Lastly, Jim Greco provided a thought to ponder to those who want to buy franchise. He said never to combine a company to a franchise. By combining these two entities may result in chaos or conflicts. According to Greco, creating multiple franchises gives you an idea of the variable from one store to another. Franchise opportunity is everywhere but it must be understood properly to run it smoothly. Having multiple franchises is good and you’ll just know what ratio is enough once you’re starting to profit enough. After which, grabbing a franchise opportunity will then be considered as worth it.

Franchise Opportunities for Small Entrepreneurs

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The growing industry of franchising has undeniably attracted a lot of small time entrepreneurs to start up with their own franchise opportunity in hope of being a success and gaining profits more than other business type owners. Buy franchise restaurants is one of the most common type of franchise being sought after by entrepreneurs in the present because of the high profit results and low capital or income costs affiliated with this kind of business model. Most restaurant chains have already expanded from places to places since some, if not most of them, believe that there is a need for them to open up and operate in certain locations to test and prove their credibility to their franchisees and on the other hand to try out new ideas, strategies and concepts. With all this growing demand for franchise opportunity, how would you know the right and accurate percentage of your company ownership?

Jim Greco, the former CEO of Sbarro and Bruegger’s said in a conference held in Four Season’s Hotel in Las Vegas that there are no magic nor exact percentage that business owners should expect when it comes to company ownership. A number of restaurant heads and executives joined together on the Franchise Finance and Growth Conference sponsored by their sister publication the Franchise Times to discuss the recent trends and changes in the restaurant industry.

Subscribing to a percentage rule is done mostly by systems that operate on their own with the belief that there is a need for them to operate 10 to 50 percent particularly when their buy franchise is growing in demand. However more and more restaurant franchisors like Applebee and Burger King have set down their locations in the past recent years compared to those successful ones that have been profitable and buying.

The CEO of Texas based Wingstop Charlie Morrison once said that holding to the percentage of unit ownership is not necessary, since franchisors need to keep in mind that enough locations is done to be able to understand the changing variable and demand of vast markets especially in a franchise opportunity. He says that when you are an owner you will know when you already achieved the right numbers. When you are an owner remember to keep in mind when you buy franchise to not mix franchise market with company because it creates problems and conflicts. Merging the two can give rise to competition for employees and locations that are not supposed to happen when approving for a franchisees new location. Looking for locations for company units is a much different thing as stated by Greco.

Things to Ponder Before Purchasing a Franchise

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Entering into the world of business comes with risks however franchising offers limited or calculated risks. Franchising made a name for many young and old entrepreneurs in the world of commerce and it has a lot of benefits to offer. One of the many benefits it can bring to a business is a national recognition of its brand, supported trainings, and unlimited management and marketing seminars. Starting a business is tricky but with a franchise opportunity, entrepreneurs are able to avoid problems normally faced by newbie’s.

There are different types of franchise and we frequently encounter the business format franchising. This type of franchising is like spoon feeding all the needed things the franchisee has to know about the business. The franchisor is in charge of supplying the blueprint of the following; building, marketing strategies and the entire process of its goods and services. In addition, it is the responsibility of the franchisor to endorse everything he knows about the business.

A franchise opportunity such as the business format franchising is simple; the franchisor is responsible in guiding the franchisee on how to set up the business which involves strategies in terms of advertising and other services that is beneficial for the business. Another type of franchise opportunity is the product and trade name franchise. This type of franchise are common in automobile dealership where widespread research and buying ability are provided to allow an entrepreneur to provide products that are not locally found in the area.

However, when you buy franchise it doesn’t only comes with a lot of advantages. It also comes with some things to consider such as paying for the business trademark, royalty and an up-front fee. Aside from these payments, one might need to spend a lot for the equipments needed to jump start the business. The most important part to consider when you buy franchise is the guidelines you have to follow set by the franchise owner. This is a legal agreement that you must consider before you buy franchise.

Before jumping on a decision, you must thoroughly research the things you need to know about the type of franchising you want. Each franchise agreement is different from the other so start harvesting information to give you enough knowledge about franchising. You can start checking on www.ftc.gov if you want to know more about federal regulations. If you want to read more about franchising, www.entremkt.com/ifa can provide you informative franchise books. Franchising is a sure fire way if you want to start your business on the right track, however you must be diligent enough to do your research and harvest the needed information before jumping into one.