Nov 22, · Running a franchise can be a great way to start running your own business, but you need to understand why you are getting into it, what you are getting into, whom you're getting into it There are advantages to buying a business or franchise — not least, much of the hard work has been done for you. a business plan; good financial record or rating. If you want to buy a franchise, speak to current franchise holders about their experiences with that brand. Buying a franchise A franchise is a branch of an existing Feb 08, · Types of Franchise Business in the Philippines. In the Philippines, there are two main types of franchising. Business Format Franchise. This is the most common type – where the franchisor gives the rights to things like trademarks, trade names, business processes, as well as the system order, which allows the franchisee to operate the business for a fee
Franchising | Franchise Business Oppurtunities | Buy a Chatime Franchise
Skip navigation. Thinking about buying a franchise? Investigate before you invest. Before you sign on the dotted line, read this guide for advice on evaluating franchise opportunities, do i need a business plan to buy a franchise. When you buy a franchise, you may be able to sell goods and services that have instant name recognition, and get training and support that can help you succeed.
It suggests ways to shop for a franchise opportunity and highlights key questions you need to ask before you invest. A franchise enables you, the investor or franchisee, to operate a business. For example, the franchisor may provide you with help in finding a location for your outlet; initial training and an operating manual; and advice on management, marketing or personnel.
The franchisor may provide support through periodic newsletters, a toll-free telephone number, a website or scheduled workshops or seminars. Your initial franchise fee will typically range from tens of thousands of dollars to several hundred thousand dollars and may be non-refundable. You may face significant costs to rent, build and equip an outlet and to buy initial inventory. You may have to pay the franchisor royalties based on a percentage of your weekly or monthly gross income.
You also may have to contribute to an advertising fund. Some portion of the advertising fees may be allocated to national advertising or to attract new franchise owners, rather than to promote your outlet. To ensure uniformity, franchisors usually control how franchisees conduct business. These controls may significantly restrict your ability to exercise your own business judgment. A franchisor may control:, do i need a business plan to buy a franchise.
Many franchisors retain the right to approve sites for their outlets, and may not approve a site you select. Some franchisors conduct extensive site studies as part of the approval process and a site they approve may be more likely to attract customers.
Franchisors may impose design or appearance standards to ensure a uniform look among their outlets. Some franchisors require periodic renovations or design changes; complying with these requirements may increase your costs. Franchisors may restrict the goods and services you sell. For example, if you own a restaurant franchise, you may not be able to make any changes to your menu. If you own an automobile transmission repair franchise, you may not be able to perform other types of automotive work, like brake or electrical system repairs.
Franchisors may require that you operate in a particular way. They may dictate hours; pre-approve signs, employee uniforms and advertisements; or demand that you use certain accounting or bookkeeping procedures. In some cases, a franchise advertising cooperative may require you to sell some goods or services at specific discounted prices, which may affect your profits. Or, the franchisor may require that you buy supplies only from an approved supplier, even if you can buy similar goods elsewhere for less.
A franchisor may limit your business to a specific location or sales territory. For example, the franchisor may have the right to offer the same goods or services in your sales area through its own website, catalogs, other retailers or competing outlets of a different company-owned franchise.
Franchise contracts last only for the number of years stated in the contract. A franchisor can end your franchise agreement for a variety of reasons, including your failure to pay royalties or abide by performance standards and sales restrictions. Franchise agreements may run for as long as 20 years. Renewals are not automatic, do i need a business plan to buy a franchise. For example, the franchisor may raise the royalty payments, impose new design standards and sales restrictions, or reduce your territory.
Any of these changes may result in higher costs, reduced profits or more competition from company-owned outlets or other franchisees. Before you invest in a particular franchise system, think about how much money you have to invest, your abilities and your goals.
Be brutally honest. Attending a franchise exposition allows you to see and compare a variety of franchise possibilities at one time. Before you attend, research the kind of franchise that may best suit your budget, experience and goals. When you attend, visit several franchise exhibitors who deal with the type of industry that appeals to you.
Ask questions, including:. Exhibitors may offer you incentives to attend a promotional meeting to discuss the franchise in detail. These meetings can be another source of information and give you a chance to raise questions, but they may also expose you to high-pressure sales tactics. Be prepared to walk away from any franchise opportunity — and promotion — that does not fit your needs. Typically, a broker reviews the amount of money you have to invest and then directs you to opportunities that match your interests and resources.
A broker also may help you finish applications and the paperwork to complete the sale. Brokers often work for franchisors, and are paid only if a sale is made. That may be true — or not. Ask how many franchisors the broker represents.
A broker who represents only a few franchisors will give you limited suggestions. Some franchise brokers may claim they will suggest only those franchises that meet certain standards.
You may think this means that your risk is limited because the broker weeds out poor investments. In fact, some brokers represent any franchisor willing to pay them a commission for a sale. Ask how the broker selects franchisors to represent. Ask to see the selection criteria and how many franchisors the broker has recently turned down. Some brokers earn a flat fee regardless of the price of the franchise they sell. Others earn a commission based on the cost of the franchise. These brokers may steer you toward a more costly franchise to increase their commission.
Ask who pays the broker and how the payment is calculated. Find out whether the broker earns a commission based on the cost of the franchise. If he or she does, consider whether the broker is suggesting a higher priced franchise in order to earn a larger commission.
To convince you to buy a particular franchise, a broker may talk about how much money you can make. These claims may not be true or can be misleading. Or the claim may be based on outdated industry data. In some instances, earnings claims may use gross sales figures, but when you consider likely expenses, you may find that actual earnings will be far less.
Talk to them, rather than relying on information from the broker alone. Ask about their experience with the franchisor.
Purchasing a franchise is like any other investment: it comes with risk. Is it seasonal or evergreen? Could you be dealing with a fad? Does the product or service generate repeat business? How many franchised and company-owned outlets are in your area? Does the franchise sell products or services that are easily available online or through a catalog? How many competing companies, including competing franchises, do i need a business plan to buy a franchise similar products or services at a similar price?
Are those companies well established or widely recognized in your community? Sometimes, do i need a business plan to buy a franchise, franchise systems fail. What will happen to your business if the do i need a business plan to buy a franchise closes up shop? Will you have access to the same suppliers?
Could you conduct the business alone if you have to cut costs or lay anyone off? An established franchise with a well-known name — and good reputation — is more likely to draw customers than a relatively new or unknown franchise. What training and continuing support does the franchisor provide? Does the training measure up to the training provided by other franchisors in the same type of business and for workers in that field?
Can you compete with others who have more formal training? What backgrounds do the current franchise owners have? Is your education, experience or training similar?
What do current franchise owners say about the quality and usefulness of the training they received? Many franchisors that operate well-established companies have years of experience selling goods or services and managing a franchise system.
Some franchisors started by operating their own business. Find out how long the franchisor has managed a franchise system. Does the franchisor have enough expertise to make you feel comfortable? If the franchisor has little experience managing a chain of franchises, take promises about guidance, training and other support with the proverbial grain of salt. In fact, a franchisor that grows too quickly may not be able to support its franchisees do i need a business plan to buy a franchise the services it promises them.
Are they sufficient to support you and all the other new outlets the franchisor plans to open? Under the Franchise Rule enforced by the FTC, you must receive the document at least 14 days before you are asked to sign any contract or pay any money to the franchisor or an affiliate of the franchisor. You have the right to ask for do i need a business plan to buy a franchise and get — a copy of the FDD once the franchisor has received your application and agreed to consider it.
The franchisor may give you a copy of its FDD on do i need a business plan to buy a franchise, via email, through a web page or on a disc. The cover of the FDD must provide information about the available formats.
Make sure you have a copy of the FDD in a format that is convenient for you, and keep a copy for reference.
Do I Need a Business Plan when Starting a Franchise?
, time: 1:44A Consumer’s Guide to Buying a Franchise | Federal Trade Commission
Feb 08, · Types of Franchise Business in the Philippines. In the Philippines, there are two main types of franchising. Business Format Franchise. This is the most common type – where the franchisor gives the rights to things like trademarks, trade names, business processes, as well as the system order, which allows the franchisee to operate the business for a fee Do I need cash or equity towards the purchase of a franchise? Yes, you will need to have access to at least 50% of the total investment cost. Seeking professional advice, you may have this in actual cash, funding from family and friends, equity in your home/investment properties or a combination of all If you need financing to buy a franchise, a bank lender may be able to provide you with a Dun & Bradstreet report or similar financial profile of the franchisor. The bank also might obtain sales and profit information from the franchisor, even if the franchisor won’t give you that information
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