Franchise Opportunities Guide For Entrepreneurs
Find The Perfect Franchise Opportunity For You
Many types of franchise opportunities are perhaps some of the easiest business models to operate. The parent corporation takes care of the branding, advertising, training, support, and everything you need to operate a franchise successfully. With so many franchise opportunities, the toughest aspect of deciding to own a franchise is choosing which type to buy.
For those looking to start first-time businesses, or those who would like something a bit more manageable than launching a business from scratch and facing all of the unknown challenges without a support network, there are franchise opportunities. What makes franchise opportunities attractive is that they are available for every budget. They have built-in branding, marketing, and training, plus the added benefit of a support network. These assets help franchise owners sidestep or move past any challenges that might come up along the way.
What Are Franchise Opportunities?
When most people think of franchise opportunities, food is usually the first thing that comes to mind. After all, McDonald’s has pretty much become the golden archetype for franchise opportunities. Allowing them to have turned into a veritable global empire. However, franchise opportunities are much more diverse than people think. There are franchise opportunities, which appeal to practically every interest, and exist across every industry. Some franchise opportunities can be run from the house, such as Cruise One Dream Vacations. There are also high-end franchise opportunities, like Choice Hotels International, which can have a start-up investment cost of over $17 million. Basically, franchise opportunities are businesses that have figured out a repeatable and streamlined business model. This model can pretty much be put in the hands of anyone with business know how.
More Than Just Burgers and Fries
The top franchise business opportunities are no longer just about owning a fast food restaurant with a drive-thru window. In fact, there are great business opportunities in almost every industry imaginable. If you have a particular hobby or area of expertise, odds are very good that you will be able to find some of the most profitable franchises appealing to your interests.
Franchising Opportunities Throughout History
Franchise opportunities are not as new as people might think. Dating back to the twelfth century, since the inception of a Guild system that formed out of the Byzantine Empire, we have seen the concept of the franchise develop. In those days, franchise opportunities took the form of trades and skills. Carpenters, farriers, wheelwrights and the like would open a business, and take on apprentices. As apprentices became more proficient, they would graduate to the journeyman level. Thus having the ability to open their own shop, while paying dues to the master. Eventually, apprentices would become masters themselves, and start teaching the trade. Regular fees and taxes were paid in order to remain as part of the guild. This let them receive the benefits thereof, such as discounts on raw materials, protection against competition, and distribution.
From the basic concept of the franchise, we jump hundreds of years to the 18th and 19th Centuries, where franchises were beginning to pop up in the young United States. By this point, franchise opportunities had expanded to intellectual property, offering licensed rights to distribute, repair, and use brand names. It was not until the 1950s and 60s that we began to see the true form of franchise opportunities as we recognize them today. Contained, fully replicable businesses with streamlined operations, designed for maximum profitability. We have come a long way, and with the advent of the Digital Age, franchise opportunities are becoming more diverse, affordable, and have a global reach.
Why Consider a Franchise Over Startups From Scratch?
Working for someone else is a double-edged sword. Yes, it is true that employees do not have the ultimate responsibility of steering the company or making the top-level decisions. To most people, that may save a lot of stress. Simultaneously, because employees do not have that responsibility or power, there is no such thing as true job security when working for someone else.
Franchise opportunities are often quoted as businesses with training wheels. This is not meant to be derisive, in any way. Franchise opportunities are great for those who want to take control of their financial future. While still having the support, built-in branding, and other benefits offered by the franchisor. Instead of building a business from scratch, and forging new territory with all of the potential pitfalls that entails, franchise opportunities provide the market research, inroads, training, and everything else needed to launch an operation quickly and easily.
Am I Ready To Consider a Franchise?
By virtue of reading this far, you have at least a passing curiosity about franchise opportunities. Do you sometimes think there is more to career fulfillment than working for someone else? Franchise opportunities may be the alternative you are seeking. Do you want to take control of your financial future, and not have to worry about job security?
Looking into franchise opportunities will give you some direction. Is feeling that sense of ownership something you want, but also want to have that built-in support so you are not “making stone soup” so to speak, by starting with nothing but an idea? Do you like having a plan and guidelines in place, so you do not have to worry about any of the traps that befall most traditional entrepreneurs? Do you like a sense of accomplishment and knowing that your successes are your own? If you answered “yes” to any of these questions, then you might be a perfect fit for franchise opportunities.
We are going to look at franchise opportunities from a high, medium, and granular level. This will give you a good overview of the major aspects and requirements to purchase, launch, and run successful franchise opportunities. Even if you currently know very little about franchise opportunities, read through this article, so you can decide for yourself if this is the right career move for you.
What Type Of Person Is Best For a Franchise?
The theory behind franchise opportunities is to provide a replicable and universal business model. A model that removes most of the groundwork for franchisees. In a sense, anyone can sift through franchise opportunities, pick one, and be successful with it. Regardless of the products, services, or industry focus. However, just because franchise opportunities are streamlined or “turn key” does not mean they are a good fit for everybody. We will discuss this in more detail later in the guide.
Do You Have What It Takes?
It takes someone who is motivated and eager to turn a profit, to start a franchise. No franchise will demand owners to have multiple business degrees. Nor do they expect you to have a full understanding of how everything works from the basic supply chains on up to the CEO’s responsibilities. But, if you do better when not in leadership, team or project management roles, then franchise opportunities may not be right for you.
On the other hand, seeing the potential for revenue from franchise opportunities usually opens the door for people to step outside of their comfort zones and embrace the possibility of personal success. Franchise opportunities offer the best springboard for those who are looking for first-time entrepreneurial ventures, and those who want something a little more “low maintenance” compared to a high-pressure startup.
Franchise Opportunities Are Designed For Success
Because of the streamlined business model, and built-in support, franchise opportunities lend themselves to being successful. After all, franchisors would not offer the business model to qualifying individuals if they did not have quantifiable data stating franchise opportunities would generate profits. No grounded corporation offers franchise opportunities to lose money. There would be serious repercussions if they did. However, “success” is a two way street with franchise opportunities.
A person has to want to be successful and understand the franchise process, in order to generate revenue. One cannot simply hang an “Open For Business” sign on the door and expect sales to walk through the door. All franchise opportunities require active management to ensure costs do not exceed sales and to ensure customers are happy and – ideally – willing to give the establishments repeat business.
Which Opportunities Are Best?
Some people believe that only nationally, or internationally recognizable brands make for successful franchise opportunities. This, however, is far from the truth. There are a number of factors that go into figuring out the right franchise opportunities for an individual. In some cases, depending on the criteria, even if an emerging entrepreneur can afford to buy into a particular franchise, the parent company may be unable to make a match. We will get into this in the next section.
There are franchise opportunities available for people interested in cleaning services. Franchise owners in this industry have no problem cornering the market in a given location. Cleaning franchise opportunities can have a relatively low buy-in fee for residential cleaners. However, the initial franchise costs can increase greatly for franchises of this nature that work with commercial spaces such as offices, hotels, resorts, healthcare centers, schools, and similar locations. While there are the usual fees for marketing materials, training, and access to the support network – the higher end cleaning franchise opportunities charge for transportation vehicles, proprietary supplies, equipment, and waste disposal. Despite the high fees, many cleaning franchise owners quickly find themselves with a large client base and often expand to own multiple franchises covering an entire geographic location.
Accounting and Tax Services
Location, Location, Location
Not all franchise opportunities work in every geographic location. To go back to food for a bit, Dairy Queen, “Home of the Blizzard,” may not have a huge demographic in, say, Alaska. Franchisors tend to look where marketing research guides them. Franchisors want to make money and grow their brands, and they cannot really afford to take a risk on a franchisee who lives in an area where there are no potential clientele to offset the cost of operations.
On the other end of the scale, franchises sometimes run into market saturation. Look at New York City, for example. Finding a Dunkin’ Donuts is incredibly easy. To open up one more in the same radius only causes cannibalism, of sorts. These franchise opportunities will take customers from each other, through no fault of their own, and every Dunkin’ Donuts franchise owner in that location will see a drop in potential profitability. Franchisors prefer to let franchisees establish operations, which can maximize growth potential, without competing with their own.
A Successful Franchise Must Serve A Purpose
What franchisors look for above all else is a target audience, with money to spend in a given area. If you go to sites like Forbes and look at some of the top ranking franchise opportunities, you will see that it’s not all about burgers and fries. The most profitable franchise opportunities serve a niche purpose and directly connect with their audience. Visiting Angels, for example, works in the field of senior care, an ever growing industry.
Visiting Angels offers private home care for seniors. The average franchisee sees revenue totaling over $1 million, annually, with an average start-up cost of $40-60K. FastSigns offers advertising services to businesses. Because of their focus, they have exploded over the past few years, and are currently looking to expand into markets in new states, including Hawaii and Alaska. When seeking the best franchise opportunities, it is best to do some research to see what your town or city is lacking, and seeing if there is a profitable market to tap into.
Franchise Opportunities To Fit Every Budget
Perhaps one of the toughest things to do is pick out franchise opportunities that fit within your desired budget. By going to Franchise Gator, people can browse franchise opportunities and filter them by criteria such as industry, location, and budget.
One of the award-winning franchise opportunities, Cruise Planners, has initial start-up costs that can be as low as $2000. The low buy-in cost, the ability to set your own hours, and the potential profitability have given Cruise Planners top ratings with magazines like Entrepreneur as one of the best “starter” franchise opportunities.
Figure out your budget, or sort through prospective franchise opportunities and check out the cost of the initial investment, to help narrow down the ones that are viable.
Do Franchises Require Real Estate?
The short answer is no. The more detailed answer is each franchise opportunity has its own set of requirements. Some franchises can be built into existing structures, or set up in retail shopping centers. Other franchise opportunities will require stand-alone structures that fit the franchisor’s specifications (like Pizza Hut or most IHOPs). Some run out of vehicles, such as branded trucks or vans. Others can be run out of the comfort of your own home, with a dedicated phone line and Internet connection. For example, a Hampton by Hilton Hotels would require construction from the ground up, and meet all specifications laid out by the franchisor. Specifications from the number of rooms, right down to the type of fixtures and towels.
Do Franchises Require Equipment?
The equipment required by franchise opportunities is usually specific to the particular franchise you are buying. Many home-based franchise opportunities simply require a computer with an Internet connection and a dedicated phone line. Other franchise opportunities demand franchisees use proprietary equipment, and they will point franchisees to vendors who supply the special equipment needed to run the franchise.
There are also some franchises that use specific products, such as Lawn Doctor or The Merry Maids. Those products are usually available directly through the franchisor. On the far end of the spectrum with franchised hotels, the parent company will want you to keep everything from toiletries to uniforms, and even napkins bearing the franchise brand. These items can usually be supplied directly by the franchisor, and they will even point you in the direction of cleaning services.
Choosing The Perfect Franchise Opportunities
Picking franchise opportunities involves a lot more than looking at a list and deciding, “Hey, this looks like it’ll be fun!” While it is true that most franchise opportunities are designed to remove guesswork, and run successfully for franchisees, there is more involved in the selection process. Franchises make great businesses for emerging entrepreneurs, but there are a number of things to consider before taking the plunge.
Evaluate Yourself Before Looking At A Franchise Opportunity
While most franchise opportunities are streamlined, they are still fully-fledged business operations. As such, there are basic business skills required to keep things going. How comfortable are you with business accounting? Management? Conflict resolution? Logistics? Basic commerce from a non-consumer point of view? There are a number of places to take crash courses in business, economics, and accounting to get yourself more comfortable with launching and running your own franchise.
Websites like EdX.org have free online courses for those who want to learn about these topics and more, in order to prepare for the undertaking of buying into a franchise system. Many people have had their franchise opportunities terminated by the parent company because they could not keep books balanced, order inventory before they ran out of supplies, or simply did not understand how to manage employees.
What Is Your Level Of Experience?
When doing a self-evaluation before deciding on which franchise opportunities to purchase, you should take a good look at our own work experience. Have you had any managerial or leadership roles? If so, how did you feel you performed? How did others view your performance? Perhaps the most important questions to ask are “Can you handle owning and running a business? And “Are you flexible and open to guidelines and promotions that might change your regular operations?”
Franchise opportunities try to adhere to certain rules and guidelines. However, one of the exciting things about running a franchise is that it is not always the same humdrum routine. There are occasionally directives and promotions that come from above which require a shift in the way franchise opportunities operate. McDonald’s didn’t always sell breakfast. Singer only operated by mail order catalogs. Dominos Pizza never used to take online orders. The economic landscape – even though it adheres to certain axioms – it is still rather fluid. Franchise opportunities try to keep up with the times, and being a flexible and agile leader can mean the difference between success and stagnation.
How Much Can You Handle?
While the basic concepts are universal across most franchise opportunities, not all franchises run at the same pace, or on the same scale. Someone running a franchise for H&R Block may have a small office, but an incredibly high volume of business between January and April (tax season). Running a franchised hotel, such as Embassy Suites, not only has high customer traffic, but also the scale and scope of the business may be too much for most people to handle.
When considering franchise opportunities, it is very important to be aware of your limitations, as well as your ambitions. How much work are you willing to put into your business? How many hours a week do you want to dedicate to your franchise? Do you want to eventually own a number of franchise operations? How complex do you want the logistics and coordination to be?
How Are You At Problem Solving?
When purchasing franchise opportunities, it is important to know yourself, especially when it comes to problem solving. Franchise owners do not necessarily have to know how to do everything, but they do need to know how to handle problems when they arrive. Let us look at a classic problem-solving example. Let us say that you are running a Golden Corral Buffet. There are a lot of customers coming through the door, half of your staff has called out of work due to a flu epidemic, and the plumbing in the bathroom is leaking. Most people would throw in the towel, or freeze like a deer in the headlights. Which problem do you handle first? How do you “make it right” for customers and address their needs? First, are you a licensed plumber? If the answer is no, then don’t waste your time on the plumbing. Call a professional.
Develop Relationships You Can Count On
Most franchise opportunities have deals worked out with businesses in the area to service emergencies like this. Now, to address being short staffed. Call people who are on their days off and ask if they want to earn some extra money. Call the closest Golden Corral and see if you can “borrow” some staff for the day to fill in the gaps. Worst-case scenario? You have training from corporate, and it may be time to don your cape, roll up your sleeves, and get in the trenches right next to everyone else to meet the needs of hungry clientele.
Your efforts will be appreciated by the corporate offices; your employees will look to you as a role model for being a “hands on” leader; and the customers – the people giving you money – will walk away satisfied and impressed with how you handled things and kept your cool. While franchise opportunities call for people who are willing to learn diverse skill sets, and who have the ability to break problems down into smaller steps, and act on viable solutions quickly.
What Do You Care About?
When browsing franchise opportunities, the answer to this question goes beyond “making money.” Franchises exist across all industries, and fill niche markets within those fields. In short, you should look for something that appeals to your interests and passions. Maybe you want to make the world a cleaner place, so you should look into franchises like Vanguard Cleaning Systems. Perhaps you want to eliminate pests, but want to do so with environmentally friendly procedures – Eco-Safe Pest Control might be the franchise opportunity for you. Do you believe people should have efficient and money saving heating and cooling systems? Try One-Hour Heating & Air Conditioning. Is education and child safety important to you? There are a number of franchises available, such as Kiddie Academy and Building Kidz School. Do you like cooking? Jewelry? Travel? Computers? Hospitality?
The point is that you can find franchise opportunities that speak to your interests. The whole point of running your own business is to make money doing something you enjoy. With that said, it only makes sense to choose a franchise opportunity that appeals to your strengths and passions.
Where Do You Want To Work?
Franchise opportunities come in all shapes and sizes, giving potential franchisees a number of options. Location, is one of the most basic factors to consider when narrowing down franchise opportunities. Some people like the idea of working from a home office.
Home based franchises typically have a low initial investment and cut down on expenses for both the franchisor and franchisee. Some dream of running a franchise in their own city as a way to contribute to the community and local economy. After all, a local business provides jobs, brings in revenue, and franchisors encourage business owners to participate in community events as a means of generating good will and passive marketing.
Others like the idea of buying into a franchise opportunity that is some distance from their home. To these people, it is not about the commute. Some entrepreneurs like to keep business and personal life as separate (literally) as possible. These entrepreneurs enjoy having business “over there” and coming home to a sanctuary at the end of the day.
How To Invest In Franchises
When researching various franchises, it is best to use sites like Franchise.com, FranchiseDirect, or Franchise Gator (see above). These sites will give you an overview of every franchise in existence, plus the average cost of the initial investment, where the franchise is currently available – not all franchises exist in all locations, and how long they have been in existence. Once you have a fairly good idea of what kind of franchise opportunities appeal to you and your budget, it is time to reach out to a franchise representative.
The Better Business Bureau And Franchising
When researching franchise opportunities, most of the big names will proudly display that they are in good standing with the Better Business Bureau. However, it pays to actually read the reviews to see what customers think about these franchise opportunities.
If you want to know what it is like to work as a franchisor, check out sites like GlassDoor for a peek at opinions of specific franchise opportunities from the inside. However, this should not let Better Business Bureau and GlassDoor reviews be the only criteria for narrowing your choices. After all, there are numerous franchise opportunities that have not been in existence long enough or have enough representation to garner reviews on these and similar sites. When in doubt about choosing franchise opportunities, it helps to take a more face-to-face approach.
Talking To A Representative
When speaking with a representative, you will find out very quickly that the conversation goes both ways. The representative will try to find out if you are a good fit for the franchise. While you should be asking very specific questions about things such as pricing, fees, support, and other requirements. Representatives should have no problem going over what is expected of you. As well as what you are getting for your investment. This is a very crucial conversation that can mean the difference between investing in a franchise opportunity or having to explore other options. Some key questions you should ask about your prospective franchise opportunities are:
Talk With Other Franchise Owners
If you really want to learn about franchise opportunities, talk to an existing owner. They will tell you about their experience in starting up a franchise. As well as any of the stumbling blocks they encountered. If possible, ask if you can shadow the franchise owner for a day to see what regular operations are like. To see the various processes involved in keeping the business running. Some important questions to ask current owners of franchise opportunities are:
You Don’t Always Have To Buy New Franchise
Small, home-based franchise opportunities are great. For those looking for something like a restaurant, cleaning service, or automotive center, then you may be able to save some money by purchasing an existing franchise. Sometimes franchise owners want to retire or move onto other ventures, so they use an intermediary like FranNet to help facilitate the purchase.
All franchise opportunities have contingencies for exit strategies. To see if they are a good fit for the brand, they will hold screenings for potential owners. Working with a franchise broker who understands your price range and industry preference is a great way to find second-hand franchise opportunities or even legacy franchises that have been in business for generations. One of the great big advantages of buying a used franchise is that the location is already a proven success, so the franchisor and franchisee have less risk to worry about, as opposed to testing out a new market, and having to do more research.
Franchises And The FDD
Originally called the “Uniform Franchise Offering Circular” (UFOC), the Franchise Disclosure Document, or FDD, is a standard legal document required from all franchise opportunities by the Federal Trade Commission. The FTC requires franchisors to provide detailed documentation to prospective franchisees, which discloses how long the franchisor has been in business; any competition; and any special requirements that are specific to owning a franchise in a certain industry (such as licenses and permits). Additionally, the FDD will provide a complete list of the executives of a given franchise, as well as their business background. Other key points listed in the FDD for franchise opportunities include:
In short, the FDD is required to ensure transparency throughout the process of purchasing franchise opportunities. Potential franchise owners should know everything about the franchisor before they invest any amount of money. With some franchise opportunities costing hundreds of thousands of dollars; it is best to have as many facts out in the open before signing a legally binding contract. The FDD allows people to make informed decisions. They also protect franchisors against claims of not having informed owners of obligations and responsibilities, or if the franchisor was financially healthy.
Basic Franchise Agreements
Franchise agreements can vary greatly depending on the type of franchise, the industry, and the location. However, most franchise opportunities offer agreements that have universal and standard sections regarding what is expected of the franchisee. For example, the franchisor will outline advertising requirements and will want to approve any promotional materials you may use to generate business for your operation.
Similarly, franchise opportunities each have their own operations manual. Each will require that you follow it and keep it confidential, as it is intellectual property that belongs to the franchisor. Franchisees are also required to keep accounting and sales records. They must have them audited by the certified public accountant on a yearly basis. Other provisions listed in a franchise agreement may include:
Before any paperwork gets signed, you should find an attorney who specializes in franchise opportunities. They will be able to go over the legalese and explain your contractual obligations in understandable terms. They will also go through the fine print to point out any recurring fees, what those fees are for, and what actions would cause a breach of contract. Remember, not every business attorney is familiar with franchise opportunities or franchise laws. It can save money, time, and headaches to do your research before hiring an attorney.
Financing Franchise Opportunities
Once you get beyond small franchise opportunities and get into ones that cost tens of thousands of dollars, or more, you may have to seek external financing. Almost all franchise opportunities offer debt financing to new franchisees. When seeking franchise financing directly from they parent company, they will offer loans ranging from 15 to 75 percent of the total start-up cost. Some franchise opportunities will even offer portions of the operation at cost, in order to offset the initial expenses.
For those franchise opportunities that require proprietary equipment, vehicles, products, or uniforms, the franchisor usually has inroads with suppliers that offer leasing agreements. The reason most franchise opportunities prefer leasing over purchasing is that the terms of the agreement are usually less cost-intensive. Additionally, leasing agreements allow franchise owners to exchange old equipment for newer models after a period of use. Some leasing agreements for franchise opportunities also have benefits, such as staff training on certain equipment, repair, and cleaning.
Check Your Finances
Due to recent economic downturns, banks are employing lending practices that are actually prohibitive to borrowers. In fact, less than 20% of all business loan applications get approved by banks. That percentage is almost nonexistent for new business owners. Those who do not have a strong credit rating and financial history required by banks in order to access funds. This can be rather discouraging for people looking to buy a franchise. This leaves emerging business owners seeking alternative forms of financing in order to launch and grow their operations. Fortunately, there is an industry dedicated to getting people funding to get their businesses off the ground.
Make Sure You Have Additional Funds
Most franchise opportunities look for owners with the ability to make the initial investment, as well as a certain amount of fluid cash to hold aside without putting themselves in financial jeopardy. The reason for this is that even within the same franchise, not all launches occur the same way. Sometimes getting the real estate you need is put on hold. Zoning, permits, and licensing can take the time to process. The extra cash fluidity is a buffer in case there are any unforeseen snags between the time of purchase and the grand opening. It is also practical business sense.
Expect the best, prepare for the worst. Never go into a new business venture, or attempt to launch a franchise, on a threadbare budget that does not leave room for the unexpected, because that is practically inviting trouble. Always keep some working capital aside to help sidestep any challenges.
Fees For Franchises
In order to stay enrolled in a franchise system, there are recurring fees. Sometimes, this is an amount that is paid annually. Other times, it is a percentage of the sales made. Fees for franchise opportunities can be paid in one lump sum, or taken out automatically, depending on the franchise agreement. These fees go to cover the cost of branding, marketing materials, training, support, and anything else provided by the franchisor. In order to remain in the system, franchise owners must pay these recurring fees. Not doing so can result in a breach of contract.
What Happens If You Break The Franchise Agreement?
No one looks at franchise opportunities with the intention of breaking a legally binding business contract. You never hear about an Arby’s owner “going rogue.” There is a sequence of events that takes place, depending on how the contract is breached. If it is a failure to run certain promotions, it may be a simple admonition. Firing an employee in a situation that would be better handled by corporate human resources? That might have a bigger negative impact. The inability to make a certain number of sales, or the refusal to pay franchise fees? That might come with fines as listed in the franchise agreement or a termination of ownership.
However, most franchise opportunities have built-in mediation and conflict resolution steps to ensure issues get fixed, or that all parties part ways professionally. Does that mean the franchise operation will disappear? In most cases, no. The parent company will just line up another hungry entrepreneur who is looking at franchise opportunities to take over. Always – and this cannot be stressed enough – go over the franchise agreement with your attorney, to see what you need to steer clear of, and what constitutes a breach of contract before buying into any franchise opportunities. Not all franchise opportunities last forever, but there is no reason to keep your franchise from being the most successful one in your area of operation.
The All-Important Credit Report
There are a number of options available for financing franchise opportunities. Before applying for even a basic loan, you need a detailed copy of your credit report. Most traditional lenders will want to see your credit report before they will consider approving a loan application. Check to see if there are any outstanding balances or any marks that will send up red flags to banks and other lenders. Also remember that credit agencies, like Experian and EquiFax, are enormous, and sometimes things do not always get removed quickly.
Outstanding balances may linger well after they have been paid off. Every once in a while, a negative mark may show up that does not even belong on the credit report. You need to go through your credit report line by line and contest those things that seem out of place. In the case of outstanding balances, contact the business or collection agency that is in charge of that particular account, and made arrangements to submit payment. Most payments on balances and corrections made to a credit report are reflected within two weeks to a month. Sites like Credit Karma do a great job of calculating personal credit scores from multiple sources, and will even point you in the direction of what balances may be holding you back, and what you can do to increase your personal credit score.
Business Plans For Franchisees
Franchise opportunities may require that new owners take out a commercial or SBA loan. In order to qualify for these franchise loans, franchisees must have a detailed business plan. There are a number of templates for business plans online, such as those found on FormSwift or LawDepot. For those looking for something very professional, LivePlan or Biz-Plan can help you compile foolproof business plans for the franchise opportunities you want to finance.
Most of the information needed for your business plan can be provided by the franchisor. Ultimately, the franchisor has done a lot of the market research regarding local competition, financial projections, forecasts, costs of operations, timelines for profitability, and most of the other categories lenders will want to see before they approve a loan application.
Alternative Financing Sources For Franchises
Traditional bank loans do not always meet with approval, especially for first-time franchise owners. In these cases, franchisees must seek funding from alternative sources. One of the most common sources of capital for new franchise opportunities is friends and family members. These are the people who are going to be most supportive of your dream to open a business, and are usually willing to give some start-up capital to help you achieve your goals. The other most commonly used source of start-up capital comes from the world of commercial lending.
Commercial lenders are typically private companies comprised of entrepreneurs – many of whom have owned successful franchise opportunities in the past – who have made the transition to the world of finance. Commercial lenders understand the challenges facing franchise owners, and also believe in promoting entrepreneurship. These lenders are not bound by the limitations of traditional channels, such as banks, and provide a number of funding solutions, such as merchant cash advances, equipment financing, commercial real estate loans, and more, to help people get their franchise opportunities up and running. All of which have flexible terms and rates, and funds which are available much more readily than conventional bank loans. Most commercial financing experts have years of experience in the world of finance, as well as the private sector. Therefore, they know the needs the entrepreneurs have when faced with a businesses services that cannot be passed up.
The Family Trap: A Cautionary Tale
When looking for sources of capital to finance franchise opportunities, many people turn to personal savings or family members. Using personal savings should always be a last resort when funding franchise opportunities. You could end up putting yourself or your family in financial jeopardy with maxed out credit cards and lots of debt. This before the franchise even opens its doors and starts to turn a profit. Similarly, borrowing from family members to finance franchise opportunities can put you in a bit of a bind.
Many times, using “family money” creates a partnership. If you are unable to pay off the family loan immediately, then relative(s) may be amenable for equity in the business. This can lead to conflicts and stress, especially if those relatives are not familiar with either business ownership or how franchise opportunities work. Family members may have their own ideas of how to do things “the right way,” even if those methods fall outside of the franchise agreement. This can cause a financial and emotional rift between relatives, and that is never good.
This is not to say that every situation where people borrow money from family to fund franchise opportunities will end this way. Many family members will not only put up money for franchise opportunities but also fully support the operation. They will do everything they can to help make it a resounding success. Just be aware that there is the possibility for family relationships to go sour, especially when money is on the line.
SBA Loans For Franchises
The Small Business Administration offers loans for new and emerging franchise owners. SBA loans can be used for everything from start-up working capital to real estate, equipment, and even construction. The SBA has even recognized certain lenders for their preferred financial services. Granting them the ability to fast track loan requests for those seeking franchise opportunities. While giving them the added ability to get the most competitive terms and rates for borrowers.
Owning a franchise does not mean you are “on autopilot” for the remainder of your career. While certain creative marketing strategies, or franchise participation in community events must be cleared by the franchisor, they are usually very open to suggestions – especially when they stand to increase revenue for the brand as a whole.
Grow The Brand
For instance, for the longest time, many fast food franchises did not have breakfast menus. One day, a McDonald’s franchise owner was experimenting in the kitchen and devised a sandwich consisting of a biscuit, cheese, and an egg. The franchisee tried it out on a few employees and friends and liked the positive response. The franchise owner got in touch with the McDonald’s corporate offices to share the invention, and thus the Egg McMuffin was born. McDonald’s expanded upon this and to this day, McDonald’s Breakfast Menu is one of the most popular aspects of the franchise.
The impact of this one little selection put pressure on other franchises to compete with their own breakfast selections. Now it has all but become a given that some fast food places offer breakfast. All because of one franchise owner thinking outside of the box. In short, franchise opportunities are not bent on locking you into one way of doing things. Whether it is a new way to save money, an innovative product or service, or simply a helpful suggestion, franchisors encourage you to speak your mind.
Expanding Your Empire
One of the great things about franchise opportunities is that no one is limited to just one. If you look in any given city, you will usually see multiple instances of the same franchise. Midas, Snap-On Tools, and Taco Bell franchises dot the landscape. In many cases, multiple establishments are owned by a single franchisee. For those franchisees who “figure out” how to run and practically automate day-to-day operations, so that they can transition to a more “hands off” managerial position, more options open up.
Consider Opening New Locations Or Purchasing Existing Locations
Franchise owners can explore the possibility of either opening other franchise opportunities, or seeing if existing franchises are available for purchase. There are really two approaches to this process. The first is to consult with the franchisor or franchise representative. Seeing what franchise opportunities are available in your location is very important. The second method is to talk to other franchise owners in your region to see if they are thinking of retiring or selling their business. Once you find an available franchise, you will potentially be doubling your revenue, without competing with yourself, so to speak. Also, as an existing franchisee, some franchisors will be willing to work with you even more on financing additional locations. People have done very well for themselves by building up their first franchise operation and then expanding into multiple locations.
How The Digital Landscape Has Impacted Franchise Opportunities
Up until the 2000s, franchise opportunities were run – for the most part – one of three ways. First, people would buy into brick and mortar franchises, such as Burger King or Maaco, and provide goods and services to customers in person. Second, there were franchises that dealt in mail order distribution to customers. This was usually done on a business-to-business basis. The third method was, like Singer sewing machines, to sell licensing for other businesses to carry parts and service proprietary equipment. Now, with the advent of the Internet and mobile devices, franchise opportunities are beginning to take on a new form.
Work From Home Franchises
The world has seen a major increase in the number of work from home franchise opportunities. And Internet connection and a proliferation of laptops or personal devices mean people can work from anywhere, handle customers from a home office or the local coffee shop, without needing to purchase extra real estate or take out hefty loans. For instance, a cleaning franchise only needs vehicles, uniforms, and supplies. The employees show up to their various appointments, while the franchise owners manage books and make sales from a home office. Similarly, franchise opportunities for tutors, such as Club Z or Tutor Doctor allow people to run their own operations online and from a small home office, by providing services across proprietary software. This translates to a lower startup cost for franchisees. It also means online-based franchise opportunities have a greater market reach than the more traditional brick and mortar franchise operations.
Understand Your Customers And Seasonal Influx
As an example, every year people in a given city will flock to Liberty Tax Services to file taxes and get the most for their returns. The business is seasonal, and drops off after April, like clockwork. However, traffic is only specific to a certain geographic locale. Someone in Indianapolis or Manhattan has no reason to drive or fly to Austin or Los Angeles to have their taxes done. They can simply go to their local Liberty Tax Service franchise, and get things taken care of. However, work from home franchise opportunities like Credit Nerds provide franchisees the opportunity to take business from all around the country, thereby increasing the potential for revenue.
When we look at travel franchise opportunities, which rely solely on a phone line and a computer with an Internet connection. Such as Cruise Planners, the potential audience becomes global instead of just regional or national. Pair this with certification from Disney’s Travel with the Magic program, and sales can increase exponentially, simply by arranging vacation packages for customers.
People who start at-home franchise opportunities are not restricted to handling business in their home offices or in person. The current connectivity through computers, smartphones, tablets, and more means that people can complete sales over the phone or email, no matter where they are. Even traditional franchises, like Pizza Hut, are leveraging the Internet and mobile technology to enable customers to place orders wherever they are, which have become a new revenue stream for franchise owners.
New Ways To Connect To Customers
Additionally, the new wave of connectivity also means franchise opportunities are becoming much more diverse and niche-oriented than ever before. As mentioned above, online tutors and credit repair franchise opportunities could not have existed in the pre-internet days. Business consulting franchise opportunities, like ActionCOACH; SocialOwl, which helps local businesses grow their online presence; and Background Screeners of America, which does background checks on potential employees and other individuals, are completely run online, and with a low startup cost. As we look to the future, we may see franchise opportunities, which can be run and managed from a single mobile app.
Utilize Technology To Understand Your Options
On the other side of things, connectivity has facilitated the buying and selling of franchise opportunities. Not but fifteen to twenty years ago, seeking out franchise opportunities was quite an undertaking. It could take months to over a year to get operations up and running. Today, We have FranchiseGator (See above), FranchiseDirect, and The International Franchise Association. All of which are online portals where people can get information about specific franchise opportunities. Franchisees can even find ones near their locations which are available for purchase.
Connectivity also puts emerging entrepreneurs in touch with franchise representatives faster, and expedites the vetting process. Legal paperwork and the FDD are also not held up in correspondence. Documents can be scanned and signed digitally, taking days, if not weeks off the startup process for franchise opportunities. Indeed, business moves at the pace of technology, and franchise opportunities are embracing the digital age.
Trendy Franchise? Or Tried And True?
Some people have the “Stock Market” approach to choosing franchise opportunities. A good portion of this demographic will see rising consumer trends, and then invest in hot franchise opportunities to make a very healthy profit for a few years, and then sell the establishments to a new prospective owner for a healthy sum. On the other end of the scale, there are people who try to find franchise opportunities that will always be in demand, no matter what.
Services And Products That Are Always In Demand
AAMCO Total Car Care will always be around to service automobiles. People will always need packages delivered, so franchise opportunities like UPS will always have a healthy market share. People have health-related needs, so GNC, Pearl Vision, and Miracle Ear will have constant business for many years to come.
One of the reasons McDonald’s has remained on top of most lists for franchise opportunities is because it tends to straddle both worlds. The franchise empire not only provides staples, such as the “Big Mac,” to customers, but McD’s will also follow flavor and cuisine trends and offer menu items which appeal to those customer who want something new and different. They hold to the philosophy that trends are temporary, and only when customer demand, sales, and market research show that there is a cost benefit to those items remaining on the menu do they become permanent selections.
How Long Do Franchises Last?
One thing to consider when looking at franchise opportunities is how long you plan to be in business. Many people no longer want to work for an employer, and would rather run their own operations. With the built-in branding and support, franchise opportunities are a great place to start. Many franchisees become familiar with the rules for how franchise opportunities are run. They create a nice business, or expand into a chain of franchise opportunities, and make it a lifelong career. Others use franchise opportunities to cut their teeth on entrepreneurship. They use it as a stepping-stone to starting up their own independent ventures from scratch.
Maintaining A Career And Owning A Franchise
Depending on the legally binding aspect of the franchise opportunity, some franchisees can leave the parent company after only a few years, to start their own businesses. On the other hand, some people are taking a very unique approach to franchise opportunities. This further automates the entire process. Some people are not ready to leave their current jobs, but like the idea of owning and running franchise opportunities for the very healthy supplemental income they provide. For these people, maybe they are close to a promotion, have job security, are close to retirement, or cannot transfer their benefits plans. In these instances, franchisees hire managers to run operations. This allows people to keep their franchise opportunities successful, while still maintaining their regular careers.
In the long run, the cost of having a manager is small compared to the revenue made by a franchise, and the “hands off” approach can free up a lot of time and undue stress. Outside of single-person “work from home” franchise opportunities, most brick and mortar establishment can be run very successfully by hiring a manager. From automotive repair, to restaurants, and even large resort and hotel franchise opportunities, owners are turning to hiring managers instead of spending an additional 40 plus hours a week to juggle a franchise and their steady careers.
Can You Invest In a Franchise Opportunity With Damaged Credit?
It is very difficult to get a traditional bank loan for anything without a healthy credit score. However, when we are discussing franchise opportunities, very few first time franchise owners have the qualifying financials to get a traditional loan. Additionally, banks and similar lending institutions are wary of approving loans to new business owners.
SBA Microloan Program
As an alternative, the Small Business Administration (SBA) has a microloan program, which provides working capital to new business owners looking to acquire and launch franchise opportunities. Similarly, commercial lenders offer programs that focus on everything from acquiring real estate to equipment, and even working capital. Commercial lenders look at the overall potential profitability of franchise opportunities, rather than relying solely on credit ratings for financing approval.
Always explore your options before getting caught in a sea of red tape. Dealing with a string of denials from traditional lenders can become quite overwhelming. Most microloans and commercial lending programs can provide a minimum of $35K to $55K for franchise opportunities, which covers most, if not all, of the startup costs for small to medium-sized operations. There are alternatives available that are tailored to the needs to entrepreneurs who want to purchase franchise opportunities.
Part-Time Franchise Ideas
Not all franchise opportunities require 40 or more hours a week to run successfully. In fact, there are many part-time franchise opportunities available to people who either want to keep their regular jobs, or simply earn money while maximizing their free time. Part-time franchise opportunities can be very successful. Just because you are not putting in as many hours as a full-time job, does not mean a given franchise will not bring in revenue equal to, or more than, the average yearly salary. Headhunting franchise opportunities like Express Employment Professionals; franchised home inspection like Pillar To Post, and even in-home healthcare providers like Comfort Keepers offer part-time requirements to franchisees.
Work At Your Own Pace
Many part-time franchise opportunities can be narrowed down to ones that let you set your own hours. These franchise opportunities are great for students, stay at home parents, and retirees. A perfect example is Century 21 Real Estate. This real estate brokerage franchise gives people the ability to make a lot of money from selling properties, while also setting their own hours. A good portion of modern franchise opportunities let people work from a home office, and run their franchises with very flexible hours.
The key to finding franchise opportunities that fit your lifestyle is to talk with franchise representatives. Also, do some research to see what is required of franchisees. Some part time franchise opportunities require owners to put in a certain number of hours, or place a certain number of calls to get sales. Other franchise opportunities have a minimum revenue mark, and franchisees must meet these criteria to hold onto their contracts with the parent company.
What Works Best For You?
Franchise opportunities are supposed to be streamlined business models. Many are designed to offer entrepreneurs the ability to run their own business, without any of the stress of starting a company by scratch. However, franchisors, like franchisees, are in this to make money, and it is best to find franchise opportunities that line up with the amount of time you are willing to dedicate to launching and continuing operations.
Time Is Money
For instance, launching a franchised hotel is going to be very time intensive. Hotels require a lot of hours, energy, and effort. But hospitality franchise opportunities also bring great rewards. Franchise opportunities from DoubleTree, for example, can have an initial investment of a few hundred thousand dollars, and yield annual revenue of over a million dollars. A small home office-based travel agency franchise opportunity may have the potential for over a million dollars in revenue. The more realistic amount, for the time and effort required, can be scaled to between tens and hundreds of thousands of dollars. This depends on the hours one puts into making sales.
Not all franchise opportunities have the same requirements – even within the same industry. It is best to ask thorough and direct questions of your franchise representative. Also, go over the FDD agreement to see what the average franchise earnings are compared to the amount of time put into running the operation.
What Is A “Turn Key” Business Opportunity?
When discussing franchise opportunities, the term “turn key” tends to get tossed around quite a bit. “Turn key” refers to anything that is, metaphorically speaking; ready to go by the turn of a key. Franchise opportunities that are designed to be “turn key,” still require a vast amount of work. Smaller franchise opportunities may require fewer hours and less effort than larger operations, but even they require work. For the most part, truly turnkey franchise opportunities rank up there with grails and unicorns. Simply put, they do not exist. This, however, does not mean franchise opportunities cannot approach the turnkey ideal.
Purchasing An Existing Franchise
Entrepreneurs who buy already existing franchise opportunities usually end up inheriting the workforce, customer base, and supply lines. This removes the burden of hiring people and getting the operation off of the launch pad. Everything is already in place. Similarly, as we hinted above, purchasing new franchise opportunities can be made more turnkey by hiring a manager or two. This allows franchise owners to take a step back from micromanaging. Instead focus on running numbers and analyzing metrics. This let’s them see which aspects of the business need to be nudged in order to improve efficiency and success. Remember, just because there are no true turnkey franchise opportunities does not mean operations cannot be automated.
Streamline Your Franchise
Not all franchise opportunities require owners to be on the front lines for 40 plus hours a week to keep things running perfectly. Moving forward, franchisors will be looking for ways to streamline things even more. It never hurts to be pro-active. Come up with processes to make things run more smoothly, without having to be hands-on all of the time.
Also, as mentioned above, franchisors are always on the lookout for new suggestions. If you find an automation process that works for your franchise opportunity, mention it to the powers that be. Parent franchises may reward you for an idea that can be implemented in all of their franchise operations. You cannot always see the big picture if you are running things from the trenches. Making franchise opportunities as “turn key” as possible can grant you more free time, and alleviate stress in the long run.
Are There “Recession Proof” Franchises?
Breaking down consumer spending with relation to franchise opportunities is very simple. When the economy is booming, people make more purchases. When there is a downturn or a recession, there is less consumer activity. People try to hold onto as much money as possible, or shop around for the best deals. That being said, not all franchise opportunities experience a stagnation or decline in sales during a recession.
Finding Opportunities That Are Always In Need
Fast food franchises, like Taco Bell, offer great deals, and customers recognize the dollar to quantity ratio, so they will never be at a loss during a recession. Franchise opportunities for filing taxes, while mostly seasonal, are also somewhat recession proof, because everyone will be trying to get the most money back on their tax returns, or save as much as possible. Even franchises such as Planet Fitness keep their regular business, because going to the gym is a social hub, and many people use it for business networking.
The franchise opportunities, which are hit the most in a recession, are the travel and hospitality businesses. This is because people cut back on luxuries first in bad economic times. Unless you have a fallback plan, it is best to take a critical look at franchise opportunities. Ask yourself if you can weather an economic downturn long enough for sales to pick back up again once things start to turn around.
Exit Strategies For Franchise Opportunities
Not all franchise opportunities last forever. Some entrepreneurs make a career out of running franchises. Starting with one and then expanding to get a wide coverage in their location. Many franchisees retire from their franchise operations with a very nice benefits package. Still others decide that, after a few years, it is time for a change of pace, and either move onto other positions within the corporation, or start their own businesses from scratch. In rare cases, people come to the realization that the franchise model is simply not for them, and need to make a clean break to start over.
Franchises Through The Ages
Franchise opportunities across the board all have exit strategies built into their business models. Some people have had franchises in their families for generations. As one person retires, the business is sold to a daughter, son, or other close relative. In the case of retirement planning, the franchise representative will work with you to find someone who is a good fit for your location. The burden is not on the franchisee to fill their own position, but franchise opportunities, like nature, abhor a vacuum. The replacement owner will shadow you for a while, well before you retire, to get a feel for what makes your establishment successful.
A similar sequence of events will take place if a franchise owner needs to leave to start a new career path. The franchisor may find a temporary manager to fill in until a more permanent replacement can be found in case of an emergency. Every situation is unique with franchises and their owners, but each one has an exit strategy. If you foresee a need to use that exit strategy, contact your franchise representative as soon as possible.
Remember, Franchises Nurture Talent
Owning a franchise involves team building and keeping morale high. Owning a franchise also means being able to spot talent, responsibility, and potential. Franchise opportunities prefer to promote from within. Businesses that require more than one person, put together a team that is loaded with complementary strengths. This process can open up doors to upward mobility in the organization for dedicated employees.
If you own an Ace Hardware or Circle K, there is a time when you want to go on vacation. Instead of borrowing a “stand in” manager from a nearby location, it would probably be easier to train up one of your own employees. By doing this, they will be familiar with how things are run, and when the peak traffic hours are for customers and sales. Some people take this a step further, and train up exceptional employees to fully understand how franchise opportunities work. This is especially useful if you are looking to expand your operation to multiple franchise opportunities.
Invest In Your Employees
Having someone in place to run the operation while you purchase a second greatly increases the rate of success. Rinse, repeat, and you have a basic plan for building an empire. Some employees also have highly specialized skill sets. If you own a Meineke, someone may be great at upselling customers on additional services, or doing marketing on a “street level,” or changing tires, oil, etc. That is great. While, ideally, employees should be interchangeable. Moving someone with a specific talent into a position that plays to their strengths can translate to increased efficiency, productivity, and sales.
These people may take a step back and see how well things operate. Employees get inspired to save up and purchase franchise opportunities of their own. Providing the necessary skills and training, along with recognizing talent, goes a long way toward building up a team. A franchise that nurtures a good team that goes onto becoming business owners in their own right says a lot about your abilities.
Are You Excited About a Franchise Opportunity?
Now that you read our guide to franchise opportunities, you should have the confidence to purchase and operate a franchise. As well as some direction toward what franchise opportunities you should buy. Franchise opportunities are great starter businesses for new entrepreneurs, and can be anything from supplemental income to full time careers.
Franchise opportunities go beyond basic entrepreneurship. By providing franchisees with training, branding, marketing, and built-in support networks to help operations at all levels. Franchise opportunities are designed for success. They’re a great way to generate revenue without having to put in the long nights involved with launching a startup. Profits for franchise opportunities are typically scaled to the size and initial investment. This is something to take into account when lining up potential candidates. There are affordable franchise opportunities out there for everyone. Which one will you choose?
Similar To A Franchise Opportunity, But Better
The Commercial Capital Training Group (CCTG) gives people the in-depth training and support network. Much like all of the top franchise opportunities, CCTG goes one step further. CCTG allows you to start and run your own business with low overhead. It allows you the ability to work from home on your own schedule. The potential for unlimited income has no restrictions.
CCTG trains people in the field of commercial finance and real-estate loans. We provide our graduates access to our exclusive board of lenders and products. Our program offers support from our team of experts with experience totaling over 80 years. We will give you the education and tools to start your own business, where the profits are yours.
Most of our graduates pull down profits after just a couple of deals. This exceeds what most franchise opportunities offer after a full year of business. Something to note is that business owners will always need extra working capital. By putting them in touch with lenders and writing in your own fees, you can generate a six-figure income. This positive business service helps other entrepreneurs achieve their dreams.
Are you considering franchise opportunities, but want something you can call your very own? See what the Commercial Capital Training Group can offer you in the way of financial independence on your own terms.