For Those Considering Buying a Franchise

Published on February 13, 2019

Share Tweet Share

For those considering buying a franchise, it is crucial to seek a franchise that can meet their financial, business and personal expectations. There are countless ways to search franchise opportunities whether on the Internet or utilizing a site Franchise Grade. Without having a fundamental understanding of franchising the choice of a franchise could be the wrong one.

When considering buying a franchise, individuals should be aware of the positive and negative aspects of investing in a franchise. Although investing in the right franchise can result in far less risk than starting up a brand- new business, there are certain factors to consider. If the positive factors outweigh the negative ones than one can proceed with confidence. However, this requires that the franchise is a quality business opportunity.

The positive and negative aspects of a franchise:

Positive factors

  1. Buying into a proven business model.
  2. Can demonstrate the profitability of the franchise, provided there is a Financial Performance Representation in the Franchise Disclosure Document.
  3. An established brand-name
  4. Franchise training and support, which an independent startup business would provide
  5.  By following the franchise system, one can avoid making the same mistakes by starting an independent business might make.

Negative factors

  1. Operating under a contract that requires adherence to standards and practices with little flexibility, which can limit the creative spirit of those entrepreneurs considering buying a franchise.
  2. With few exceptions, franchises pay a percentage of royalty and ad fund fees payments. This means variable expenses will rise with increased revenues. That will increase as revenues go up.
  3. The franchise company can be sold to a competitive franchise or a private equity firm that may reduce support and services.
  4. The franchisor may not provide the services and support promised when  meeting with franchisor representatives.
  5. The franchisor can make changes to the franchise program, despite objections or feedback from it’s franchisees.

In spite of the positive and negative factors associated with a franchise, those considering a franchise opportunity who perform proper in-depth due diligence will find the advantages of a franchise outweigh any disadvantages.


About the Author: Ed Teixeira
Ed Teixeira is a recognized franchise expert with over 35 years experience in the franchise industry. He has served as a corporate executive for franchise firms in the retail, manufacturing, healthcare and technology industries and was a franchisee of a multi-million dollar home healthcare franchise. Ed is the author of Franchising From the Inside Out and The Franchise Buyers Manual. He has participated in the CEO Magazine Roundtable Meetings with business leaders from around the country and spoke at a number of venues including the International Franchise Expo and the Chinese Franchise Association in Shanghai, China. Over the course of his career, Ed has been involved with over 1,000 franchise locations and launched franchise concepts from existing business models. Ed can be contacted at 631-246-5782 or ed.teixeira@franchisegrade.com.
Considering

Franchise calculator
Thinking about buying a franchise?
Not sure how much can you afford?

Fill out our Franchise Affordability Calculator


Express Employment Professionals logo

A

Grade
Certified as:
Mtg horizontal




Edna Spearman