Tag Archives: franchise opportunity

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.

Why Start a Franchise Business Today?

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It is a common perception for start up entrepreneurs to think that when you venture into a small business the major problem that you experience is funding. Recent report shows that one type of small business has shown stability during the past five years. This type of business is franchising which has been reported to receive more funding than any other small businesses in years after the global recession.

The year 2013 is a good year for start up entrepreneurs who wants to grab the franchise opportunity for a small business. Small Business Lending Matrix and Analysis reported that the franchise venture will release more or less $23.9 billion in a form of a loan which has been the biggest amount given since 2009 in financing and funding the industry. This available loan for franchise opportunity is deemed to sustain more than 59,000 franchise businesses, which gives more opportunity for entrepreneurs to buy franchise as their business venture. The government’s Small Business Administration has contributed to the loan program by granting about $5.6 billion to interested applicants.

The advocacy group International Franchise Association Educational Foundation prepared a report that mainly focuses on promoting the franchising industry by doing things like advancing the knowledge and professional standards in the industry of franchising. The business is said to generate almost 800,000-employment opportunity and about $106 billion in sales advancing the industry and attracting entrepreneurs to buy franchise. The report also states that the franchise opportunity for entrepreneurs has shown great improvements for four succeeding years followed by improved chances of growth, higher demand of transaction for unit and more banks willing to lend for an industry that has shown positive results and continues to improve year by year.

All the reports that was shown and released all produced positive feedbacks for businessmen to be convinced to buy franchise as their start up business. With the increased loans that are readily available to be granted to those who are interested to franchise business it is not a doubt that the industry of franchising will soon be a big one before other know it. However, with all the loans given the International Franchise Association reports that the $23.9 billion money is actually short for the total $26.5 billion that is actually needed to fund any start up operations or current business franchise opportunity at the present. The report was accumulated mainly using the data released by SBA, the Franchise Business Economic Outlook for 2013 and some other useful references available for compilation.

Franchising: The Common Errors to Avoid

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In any business venture, there are always advantages and disadvantages. Same goes if you want to buy franchise, it has a lot of benefits yet it also comes with a lot of downfalls. A franchise opportunity is great and it’s easy to operate, you can instantly run it without wasting too much of your time. Applying for a loan is also easy if you’re going to franchise rather than start an entirely new business.

However, a franchise opportunity is not an assurance you’ll earn big time. In fact, it is also possible you’ll lose your money. To avoid losing your money, here are some common points you need to consider if you plan to buy franchise.

1. Don’t Tumble Over Too Much Publicity – Franchising is most of the time over publicized sending wrong notions to the public. Franchising is not an assurance that your business will not fall. Some popular personalities are aware of this over publicity that they too have agreed that franchising is not as easy as it seems. A franchise adviser named Joel Livaba once said that a franchise opportunity is great as long as one should be realistic about it. A long time marketer Sean Kelly also said that there’s no such thing as low risk in terms of business because not all franchising venture flourishes just like McDonalds.

2. There’s No Harm in Calling – Before you buy franchise, it is better to check on the FDD or the Franchise Disclosure Document which contains contact information of multiple franchisees. There’s really no harm in calling some franchisees and ask them about their experience. By doing so, you will have a better grasp of what you’re about to venture in. Of course, make sure to ask franchisees the most important question and that is if they still want to do it again if given an opportunity.

3. Ensure a Back-up Fund – One of the most common mistakes in franchising is giving everything without a back-up fund during lean times or emergencies. Starting up a franchise involves great amount of money and some franchisee tends to give all without saving some for the future.

4. Have a Way Out – In case you reached the darkest moments of franchising, you must have a ready plan to get out of such situation. First, you must have read the agreement or contract right before you agreed to any of it. You may lose everything when franchising; there’s a possibility of foreclosure even before the contract ends, you may have a pending loan you need to settle and you don’t have money left because you’ve given everything to start up the business. Overall, you must be clever enough to have an exit plan in cases like this.

5. Always Do Reality Check – Franchisees are sometimes blinded with excitement that they tend to ignore reality. You must question yourself if the franchise is easy to market and will you profit from it. You must not lose your focus and always get in touch with reality.

6. Is it Profitable? – Just like any other business, you must check the financial history of the franchise. Financial reports must be checked so you can weigh things before investing.

7. Business is Business – Franchising is a business so expect to maintain a business relationship. Although there are some franchise owners who wants to help, it is still better to take caution. In business, money is the main priority.

8. Make use of a Third Party Consultant – Consultants are there to offer you a hand in decision making. Never fail to have your own franchise consultant, this way you’re assured your consultant will tell what you need to know about the franchise.

9. Spend a Little for a Good Lawyer – Venturing into the world of franchising is tricky so you need to have a good and reliable lawyer to help you with your franchise contract. So invest a little in your lawyer to expect a good service.

10. Don’t Take the Bait – One of the most common misconceptions in franchising is assuming that all the hottest and newest franchise can help you earn a sizeable income. This is not true! Franchising is based on proven methods and success therefore a new franchise with no track record is a not guarantee that it will flourish.

To venture in the world of business may take years of experience, if you’re an aspiring entrepreneur then take these points seriously to avoid the common mistakes in franchising business.

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.

Successfully Breaking the 3 Franchising Myths

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There is no doubt that franchising can be considered as one of the best ways to start a business. Indeed, several small business entrepreneurs are looking for a franchise opportunity. When you buy franchise, you will have the opportunity to get benefits from this high-impact with low-risk opportunity. However, while having a franchise seems promising, there are several myths that held back some entrepreneurs to start their own franchise. Thus, it is wise that you learn how to break these myths and start your journey to success.

Myth no. 1 – The more money you spend, the more you’re going to get.

Some people would think that in order to get bigger profit, you need to invest the bigger amount of money. However, this is not true for franchising. When you buy franchise, you are not required to spend large investment but instead, you are required to spend your money wisely. Thus, calculate your financial resources properly and speed them wisely. Spend your money smartly and make sure that you can get higher returns from your minimal investment. Thus, money and profit gained don’t have any direct correlation in the world of franchising.

Myth no. 2 – Food chains are the only successful franchises in the franchising industry.

If you are looking for a franchise opportunity, the first thing to cross your mind is a food chain. Many entrepreneurs thought that food chains are the only successful franchises. If you have this mindset then, something is stopping you to buy franchise other than food chains. This myth is not true in franchising. In fact, consulting services is one of the successful franchises. This franchise option even gives higher returns compared to the restaurant chain.

Myth no. 3 – There are limited finance options.

If you buy franchise, limited finance options were available such as SBA – this is nothing but a myth. In the world of franchising, there are several financial options such as home equity loans, IRA rollover and ERSOP.

If these myths are stopping you to grab any franchise opportunity then, think again. You must not be driven by these myths and you must learn how to separate facts from the myths. If you really wanted to become successful in your franchising venture, you must learn how to break these myths successfully. Instead of focusing to these, try to establish a clearer way on how you must deal misconceptions. Better strategies, better management and wise spending would be great in achieving your goals in the franchising world.

The Difference between Franchising and Licensing

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The terms franchising and licensing are two common terms and you might find the two as similar as they may sound. However, there is a big difference between the two and you must know how they differ from each other. Identifying the difference would surely be helpful to you especially if you are planning to buy a franchise or in the process of looking for a franchise opportunity.

Franchising can be defined as a business arrangement allowing the other party, called the franchisee, to conduct the business of providing and selling products or services. The other party needs to abide to the certain rules and regulations.

The two parties involved in franchising are the franchisee and the franchisor and they need to work closely to each other, creating a good working relationship. The franchisee is considered as the extension of the parent company. Thus, the franchisee can use the company’s brand and image. Since the franchisee can retain the company’s logo and trademark, it is best for franchisor to provide necessary training to the franchisee. It is worth to give the franchisee the support they need and some amount of territorial exclusivity. When you buy franchise, you and the franchisor should maintain a visible relationship.

Different from a franchise opportunity, a licensee is not really required to build a strong and close relationship with the parent company. Thus, a licensee doesn’t receive the same amount of training and support compared to the amount of a franchisee received. Licensing companies can get the opportunity to sell similar products or services of the parent company but they don’t have the right to retain the trademark as well as the company’s brand and logo. Lastly, in licensing, a licensee does not get the territorial rights as oppose to franchising.

Knowing the difference of licensing and franchising, you might think that looking for a franchise opportunity is better than a licensing opportunity. However, licensing also has its own advantages. One notable advantage is lesser cost. Licensing requires minimal financial investment compared to franchising. In franchising, you need to pay royalty fees but in licensing, you are not required to pay the same expense. Another advantage of licensing is once the licensee can stand on its own, the relationship between the licensee and the parent company is restricted to the frequent product purchase.

Now that you finally know the difference between the two, which would you prefer? Will you buy franchise or will you settle for licensing?

Top 50 Multiple-Unit Franchise Brands Unveiled

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The recent Franchise Business Report reveals that owning more than one franchise leaves investors with greater satisfaction compared to a single franchise. Today, franchise brokering is nearly as popular as stock brokering due to the huge gains posted by the franchise opportunity to investors.

The research conducted by Franchise Business Review utilizes satisfaction ratings of over 6,600 franchisees who own more than one franchise unit from over 300 companies which are open for franchising. The report is conducted to name the best brands for multi franchise unit ownership.

To gather data for the report, all active franchisees of North American franchise companies were invited to a free satisfaction survey. Franchisees ranked their franchise based on these areas: core values, franchisee community, financial opportunity, general satisfaction, leadership, operations, product development and training and support. Information from franchisees owning 3 units or more were utilized to complete the report and determine the top multi-ownership franchise brands.

Franchise Business Review’s president, Michelle Rowan, stated that it is not surprising for multiple-unit franchisees to have greater satisfaction since owning more than one unit is more profitable and profitability can have a huge effect on satisfaction. He continued that the surprising data was that multi-unit franchise owners gave a higher ranking for their system in every question in all categories.

Auntie Anne’s, 1-800-GOT-JUNK, and CertaPro Painters are among the top franchises named in the Franchise Business Review report. The complete list of the Top 50 Franchises for Multiple-Unit Ownership can be found in http://www.FranchiseBusinessReview.com.

Multi-ownership franchise opportunity is popular in food franchisees due to the economies of scale. Just recently, multi-unit franchise brokering for all kinds of franchises has gained popularity due to the convenience in managing the franchise and the revenue earning potential of owning 3 or more franchise units.

Franchise brokering for multi-unit ownership is surely going to be the new investment trend owing to the fact that ownership of multiple units for the same brand is a sensible investment move though it poses a higher risk. Hence, Rowan suggests that greater diligence in researching multi-unit ownership is necessary to make sure that the culture has the right fit and that the brand can support the investor.

The report by Franchise Business review enlightens prospective franchisees in learning more about the franchise opportunity. It also takes a look at the features that makes a franchise a great option for multiple-ownership. All 50 featured franchises have a strong history of growth and support for the success of franchisees who own multiple units.

How to Prepare for Your Franchise’s Opening Day

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The first day of any business is a milestone. This is when business owners get to see their hard work finally paying off. For franchisees, opening day has an added pressure to perform well and impress customers who are familiar with the national brand. When you buy franchise, you get to use a proven business model but every franchise opportunity also entails responsibility to represent the brand in the best light possible. Opening day is the perfect venue to make a strong and lasting first impression on your targeted customers. There are possibilities that things can go wrong but you can offset your worries by proactively preparing for the big day.

Set Aside Sufficient Funding

It is common business sense to secure financing ahead of time. If not the single most important factor, financing will play a major role with your venture’s success. Consider and weigh your financial options before deciding to buy franchise. Either you seek out loans from banks or lenders or you can tap into your 401(k) savings to gather sufficient funds that will kick off the franchise and sustain it for several months until positive cash flow takes care of the financial situation.

Put Marketing at Work

Don’t stop with the funds. If you want customers to flock during opening day, put your marketing strategies to work. Instead of using all advertising mediums, tailor a budget-friendly and targeted marketing that will effectively spread the word about your franchise opportunity venture. You can use printed flyers or publications for promotion. Try offering coupons, incentives and opening day discounts. You may also set-up a blog or turn to social networking to reach out to prospective customers.

Make Use of Franchisor Assistance

Before you buy franchise, make sure to ask your franchisor regarding corporate support programs. Most brands offer guidelines, marketing tips and assistance to their franchisees. Use these resources and comply with guidelines to ensure that you’re not breaching the contract in an way.

Hire and Train Employees

Choosing the right employees is essential to a successful opening day and for the rest of business operation. Do not put off hiring and training until you don’t have enough time. As a rule of thumb, you should postpone operation until you are fully staffed, shortage on help will only breed problems and you don’t want to end up with unhappy customers on your first day of business.

Ensuring a highly successful first day of business is crucial because it is an indication, in some ways, of how the franchise opportunity risk you took will turn into.