Frequently Asked Franchise Questions

Frequently Asked Franchise Questions

• Why Should I Own My Own Business?
  • Business ownership offers you the opportunity to take control of your career, finances, schedule and future. You will be your own boss, work hard for yourself, and potentially reap the rewards that business ownership can offer.

• How Do I Choose The Right Franchise?
  • Deciding which franchise is right for you is a huge decision. The right business should not only interest you, but the initial investment amount must fit into your budget and it should enable you to live the lifestyle you desire (do you want more free time, more money, control over your work environment?). Additionally, any business you choose to buy must meet a market demand in your community. If there is no market demand or the area is already saturated with similar businesses, your new business will not have a bright, long future ahead of it. The best advice is to do your research before signing a franchise agreement. Speak with current and past franchise owners and make sure there is in fact a demand for the business in the area you'd like to open the business.

• Why Should I Buy a Franchise?
  • Regardless of whether you have industry or business ownership experience, you can purchase most franchises because they offer complete training, comprehensive support from the home office, a proven business system, and a product or service that has proven itself to be popular and in-demand.

• How Much Does A Franchise Cost?
  • The cost to buy a franchise varies greatly depending on what industry you choose to start the business in, whether the concept requires a storefront, office, home office, or is mobile, what state you buy the business in, and how much overhead your business will require. There are concepts that cost under $10,000 to start and other franchise businesses that require the investor to have millions of dollars in available liquid capital. Additionally, many franchise concepts offer financing or can help you gain financing if you're interested.

• Can I Have A Business Partner?
  • This varies depending on the preferences of the franchisor but yes, most concepts will allow you to have a financial partner who may also be an operating partner, if you choose.

• Can I Own More Than One Franchise?
  • Yes, but again, this can vary by franchise concept. Many franchisors will sell area or master franchises within a certain specified territory. These larger territories can be costly. If you own a single franchise and are successful, most franchisors will be pleased to sell you another territory. If you own one concept and would like to purchase another franchise from a different, unrelated brand, this is usually possible unless you plan to buy a competing concept. Make sure to read the entire franchise agreement and also have an attorney who specializes in franchise law look over the agreement before you sign it. Let your attorney know that you plan to purchase another franchise concept in the future, so he can ensure you won't have problems.

• How Can I Receive an UFOC from a Franchise Company?
  • Inquire to franchise concepts listed on Franchise.com. You will then be contacted by the company. If you are seriously interested in potentially purchasing the concept, they will most likely offer you a copy of their UFOC for review before you make a final decision.

• Which States Are Franchise Registration States?
  • Fifteen states have franchise investment laws that require franchisors to provide pre-sale disclosures, known as UFOC's to potential purchasers. These states are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, Wisconsin.

This Article was taken from http://www.franchise.com/franchise-news/frequently-asked-franchise-questions.cfm

What Is A Franchise

What Is A Franchise?

Franchising is a way of doing business. It is a method and marketing tool for companies to expand their market share more rapidly and less expensively.

Some companies, which are thought to franchises, are in fact not franchises. All stores are owned and operated by the company itself (ex. Starbucks, Gap, Victoria's Secret).

There are three basic types of franchises:

1. Distributorships, which grant the right to sell their parent company's product(s) such as auto dealerships (Toyota, Ford, GM, Mercedes, etc).
2. Trademark or brand name licensing, which gives the licensees the right to use the parent company's trademark or brand in conjunction with the operation of their own business ie. beverages (CocaCola) and sport franchises (Miami Dolphins, New York Yankees, etc).
3. Business format franchises, the type most people are familiar with (Subway, Meineke Muffler, Circle K) are the focus of this article.

Business format franchisors offer to their franchisees the license or right to sell its goods or services and/or use its business techniques. The franchisees usually pay an initial fee to acquire this right, and thereafter pay a percentage of their gross sales to the franchisor throughout the term of their franchise contract.

In return for these payments, franchisees gain priveleges, including the right to sell a proven and recognized product or service, to use the franchisor's business practices, and to receive initial training and ongoing support. Additonal responsibilities can and usually do include:

1. Requirements to meet a variety of quality controls for products and services sold.
2. Restrictions on what they can sell or how they can operate using the company's name.
3. Specifications for their business location and site appearance.
4. Prohibitions on the operation of any similar businesses during or after the term of the franchise agreement.

Franchisees usually have an advantage over their nonfranchisee competitors, since they have the rights to use the franchisor's:

1. Brand names, trademarks, copyrights, trade secrets, and patents.
2. Uniform logos, storefronts, and interiors.

By following the franchisor's business practices and offering products that meet the company's standards, franchisees can consistently provide customers with quality goods and services. In the United States the Federal Trade Commission (FTC) and certain states can decide if a franchise is acting as a franchisor. If so, they regulate the activities of the franchisor, as to marketing and sales, and distribution of required disclosure information (Offering Circular aka UFOC) about the franchise to prospective purchasers. Certain other countries have similar regulations. Research has shown that the success rate of new franchisees is much higher than that for other new business start-ups.

This Article was taken from http://www.franchise.com/franchise-news/Basic_What_Is_Franchise.cfm

Franchise Opportunity – Questions To Ask The Franchisor

Franchise Opportunity – Questions To Ask The Franchisor - #33
by: Dennis Schooley

Finding The Right Franchise

Whether it’s hamburgers, pizza, telecom, coffee, Internet, muffler parts, or seniors’ services, there are Franchise opportunities available to evaluate. There are great Franchise systems, good Franchise systems, and bad Franchise systems. The challenge is to ask the right questions to find the right system that will fit your goals and dreams. The key is to ask the questions – and listen closely to the responses. Only then can you determine if the Franchise opportunity is the right fit for you. So whether it’s food services like burgers or coffee, professional services like telecom or IT, or manual services like cleaning or oil changes, ask the questions and record the answers.

How Big Is The Market?

The Franchisor should have a good handle on the available market for the product or service that you will be offering as a Franchisee. Presumably the Franchisor has done extensive research on the current market size, as well as the potential market size for the future.

The Franchisor should be willing to share that information with you so you can assess the data to make sure that the opportunity is going to be of sufficient size to satisfy your own goals. You may have to sign a non-disclosure agreement first, but the information is important to you, so it must be assessed. The whole idea of Franchising is to ensure that the goals and dreams of the Franchisee, and those of the Franchisor, are unified. If the market availability will allow for strategies to be implemented by you, which are consistent with your goals, and those penetration goals are congruent with the Franchisor’s goals, then all is good.

If it’s a long-standing and stable market, then there should be plenty of statistics to back up that conclusion. If it’s a new and burgeoning market, there should be analysis that you can assess to give you a comfort level that you, together with Franchisor, can go get a significant share. If it’s a fad market, or limited life market, then the strategies should reflect that, as should the agreements.

The caution is that if the Franchisor is wishy-washy about the market, or is unwilling to discuss the issue in depth with you, that should be a significant warning sign.

To receive a free copy of an E-Book titled ‘Franchise Opportunity – Making The Right Decision’ by Dennis Schooley, email that request to corp@schooleymitchell.com.

About The Author

Dennis Schooley is the Founder of Schooley Mitchell Telecom Consultants, a Professional Services Franchise Company. He writes for publication, as well as for schooleymitchell.blogging.com and franchises.blogging.com, in the subject areas of Franchising, and Technology for the Layman. http://www.schooleymitchell.com, 888-311-6477, dschooley@schooleymitchell.com.

Seven Secrets to Buying a Franchise

Seven Secrets to Buying a Franchise
by: Joan Yankowitz

There are great benefits to owning a franchise. You often can sell goods and services that have instant name recognition and can obtain training and ongoing support to help you succeed.

But be cautious before you sign on the dotted line.

1. Know How Much You Can Invest - A franchisor may tell you how much you can afford to invest or that you can't afford to pass up this opportunity. Before beginning to explore investment options, consider the amount you feel comfortable investing and the maximum amount you can afford.

2. Know What Type of Business is Right for You - A franchisor may attempt to convince you that an opportunity is perfect for you. Only you can make that determination. Consider the industry that interests you before selecting a specific franchise system. Ask yourself the following questions: Have I considered working in that industry before? Can I see myself engaged in that line of work for the next twenty years?

3. Realistically Evaluate Your Own Background and Skills - If the industry does not appeal to you or you are not suited to work in that industry, do not allow a franchisor to convince you otherwise. Spend your time focusing on those industries that offer a more realistic opportunity.

4. Take the Time to Comparison Shop — Talk to or visit several franchisors engaged in the type of industry that appeals to you. Get answers to the following questions:

• How long has the franchisor been in business?
• How many franchised outlets currently exist?
• Where are they located?
• How much is the initial franchise fee and any additional start-up costs?
• Are there any continuing royalty payments?
• How much?
• What management, technical, and ongoing assistance does the franchisor offer?
• What controls does the franchisor impose?

5. Get Substantiation for Any Earnings Representations — Some franchisors may tell you how much you can earn if you invest in their franchise system or how current franchisees in their system are performing. Be careful. The FTC requires that franchisors who make such claims provide you with written substantiation. Make sure you ask for and obtain written substantiation for any income projections, or income or profit claims. If the franchisor does not have the required substantiation, or refuses to provide it to you, consider its claims to be suspect.

6. Avoid High Pressure Sales Tactics — You may be told that the franchisor's offering is limited, that there is only one territory left, or that this is a one-time reduced franchise sales price. Do not feel pressured to make any commitment. Legitimate franchisors expect you to comparison shop and to investigate their offering. A good deal today should be available tomorrow.

7. Study the Franchisor's Offering — Do not sign any contract or make any payment until you have the opportunity to investigate the franchisor's offering thoroughly. The FTC's Franchise Rule requires the franchisor to provide you with a disclosure document containing important information about the franchise system. Study the disclosure document. Take time to speak with current and former franchisees about their experiences. Because investing in a franchise can entail a significant investment, you should have an attorney review the disclosure document and franchise contract and have an accountant review the company's financial disclosures.

About The Author

Joan Yankowitz specializes in helping business owners realize their potential. Learn how to take the risk out of buying a franchise at www.howtobuyfranchise.com.

joan@howtobuyfranchise.com