Ready to accelerate your way into entrepreneurship? Buying a franchise may be the way to go. There are more than 745,290 franchised establishments in the U.S. according to Statista.
With every type of business thinkable—from donut shops to gyms.
Franchising is a great alternative to starting a business since most of the work has already been done. The franchisor has gone through all the headaches of developing and refining the concept, created an established brand, navigated supply channels, and streamlined work processes to ensure consistency. Franchisors typically do all the market research and know what markets are ready for expansion, this is where the franchisees come in to play their role.
That doesn’t mean anyone can simply buy a franchise, set up shop, and starts making tons of money. As with any new startup or business venture, you need to learn everything about the franchising companies you’re interested in, and what your specific responsibilities are, including your financial obligations. Prepare a business plan and secure outside financing early on in this process.
The International Franchise Association recommends gaining a complete understanding of the business and the type of experience required to operate it; the franchisor’s financial condition and business track record, particularly in recent years; the costs to purchase and retain the franchise once it’s operational; and performance expectations.
Most of this information can be found in the Uniform Franchise Offering Circular (UFOC), a disclosure document that every franchisor is required to provide prospective franchisees. You should review both the UFOC and the proposed franchise agreement carefully with your attorney and accountant.
Also investigate how other franchises are doing, and what their relationship is with the franchisor. Visit their facilities and watch how the operations work, then interview the owners personally to find out about their experiences, particularly the franchisor’s support in handling problems and promoting growth.
More guidance for researching and purchasing franchising may be found at the IFA’s website, which also contains a database of more than 1,000 franchise opportunities. Another valuable resource is the Federal Trade Commission, which offers numerous information pages and publications designed to help prospective franchisees make informed decisions.
Franchising is a great way to develop a consistent money stream. Like with any small business it may take a couple years to make a profit. Stick with the process and you will be on your way to financial freedom.