How to Buy a Franchise Business (Part 1)

How to Buy a Franchise Business

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With a franchise business, a “franchisee” licenses the use of trademarks and business methods from a “franchisor.” Popular franchises include fast food restaurants and brake repair shops. Franchises are a good way to gain business experience with a popular brand, because they have built-in name recognition and proven business techniques. To buy a franchise, you should first analyze the disclosures a franchisor is required to make. Don’t rush into anything. Once you have found a franchise you have confidence in, you can find funding and complete the application process.

Part 1: Choosing a Franchise

Step 1: Consider your interests. You should have some general idea about what kind of business you want to run. There are many franchising opportunities available. You can stop into your library and get a copy of the franchise opportunities handbook. There are many kinds of franchises, including the following:
•    Restaurants
•    Car repair
•    Gyms

Step 2: Learn about the franchise business model.You might be interested in starting a franchise but not really know what that entails. For example, did you know that you must contribute to advertising? Did you know that you must have to pay royalties for using the franchise’s trademarks? You should have a firm grasp on the franchise business model before going any further.
• The Federal Trade Commission has a handout on franchises that you should read

Step 3: Talk to current franchise owners. You should visit local outlets and ask the owners about their experience. For example, if you want to start a fast-food restaurant, then stop into the nearest outlet and ask if you can talk to the owner. Ask the owner the following questions:
•    Have they encountered any problems?
•    Did they have the necessary skills and experience? What kind of experience did they have?
•    Would they purchase the franchise again if they had the chance?
•    Does the franchisor respond to problems in a timely and adequate manner?
•    Has the business plan and marketing been adequate? If not, have they made suggestions and how were those suggestions received by the franchisor?

Step 4: Hire a franchise broker. A franchise broker goes by many different names - “business coaches,” “sales consultants,” and “advisors” are some of the more common. They can help you analyze and pick an appropriate franchise. A franchise broker can also help you with the application process.
•    Franchise brokers often advertise online and in business magazines.
•    Brokers aren’t free. They generally charge either a flat fee or a percentage of the purchase price as a commission.

Step 5: Consider whether you have the skills to run a business. Before buying a franchise, you should ask yourself whether you have the skills and experience necessary to make it succeed. Like every other business, a franchise will require a huge commitment of time and emotional energy. Consider the following:
•    Are you an effective manager, or do you have confidence that you can become one?
•    Do you have the finances to support yourself and your family in case the franchise isn’t immediately profitable?
•    How much money can you afford to lose? Some franchises fail.
•    Are you familiar with the industry and its regulations? Are you prepared to put in the time and energy to stay on top of these things?

(To be continued)

Source: https://www.wikihow.com/Buy-a-Franchise-Business