Look Before You Leap: 5 Things to Consider Before Investing in a Franchise

If there’s one thing that virtually all of us have in common, it’s the fact that we’re constantly looking for ways to make more money. Well, one way that you can do that is by investing, and one kind of investment that has proven to be successful for many individuals is buying a franchise. That’s because many franchises already have a proven track record of being profitable, a solid brand and a lot of the support that franchisees need in order for their franchise to do well. This would include training programs, marketing and real estate assistance and ongoing operational support from the franchisor’s staff as well.Investing in a Franchise

So, if this is something that you feel you would be interested in getting into, we have provided you with a list of five things that you should consider before investing into a franchise below:

Does your area need the product or service that the franchise provides?When you’re looking into purchasing a franchise, you definitely want to buy the kind that will prove to be profitable for you. Therefore, it’s important to do some thorough research beforehand on if the product or service is in high demand in your area. It’s always wise to look into how many competitors that you might have within a 100-mile radius as well.

What is the franchisor’s business track record? You don’t want to go into business with a franchisor without knowing a significant amount of information about them. This would include inquiring about the business’s track record and reputation, if they have a strong infrastructure and if there are any current legal issues that they are battling with. This brings us to the third thing that you should consider.

What is the financial strength of the franchisor? It is important to do business with a franchisor who is financially stable. For this reason, you are well within your rights to ask them to provide you with relevant business documentation that you can take to your lawyer and/or accountant to review. It’s also a good idea to ask them about their 3-5 year future plan and if they are willing to provide a “disclosure” statement upon your request as well.

What is the franchisor’s fee and financial interest? Being that it can cost several thousand dollars to own a franchise, you need to know what the franchisor’s initial fee is. Not only that, but since a lot of franchisors desire to have on-going royalties too, you should also find out how much they plan to earn from the franchise even once you buy it.

How does the franchisor select the individuals that they do business with?Say that you go to a website like Franchise Expo to see what kind of franchise business that you want to invest in. As you’re narrowing down the options of the one of that you would like to by, also seek information on the kind of individuals that the franchisors tend to hire. Many franchisors will share their franchisee profile along with any education or training that they would prefer for them to have. That way, you can be thoroughly prepared before you actually meet with the franchisor. For more information on franchise investments, visit Franchise.

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