Deciding on a Franchise Business

2015-02-26 12.57.34Franchising is one of the most popular business models today. There are many different type of franchise opportunities to buy into. Finding the right franchise business in the vast amount of possibilities may seem difficult. Researching a franchise business opportunity before investing will make deciding on a franchise business much easier.

 

When deciding on a franchise business it is important to take into consideration the varied costs involved in purchasing the business. Setting goals as to how much you are able to initially invest, and how much money you are able to continue investing as your franchise business grows is an important first step. The cost of initial franchise fees could range from tens of thousands of dollars to hundreds of thousands of dollars. Other costs to consider in initial start-up of the franchise business can be rent for a pre-existing office, store, building or facility, or the cost of construction for a new building. Other start-up costs may include the cost to equip the business, initial inventory, operating licenses, insurance, and promotion fees.

 

Your skills, training and education can guide you in deciding on a franchise business. Certain businesses require training, licensing or certifications for their owners and employees. Some of these types of businesses may include real estate agencies, auto repair, interior design, or tax preparation. Investing in a franchise business that you already possess the knowledge and training for should increase the speed to get the business up and running. For example, if you enjoy vaping and the electronic cigarette industry then something like a Vapor Galleria Franchise Store would be a great investment. You already have knowledge of the product and are familiar with the particular industry and its customers.

 

Having a clear picture in your mind of what your franchise business looks like before you decide will help with narrowing down the business possibilities. Decide what type business or industry you would like to work in, where the business is located, and what your business environment is like. How you want to do business with your customers is another consideration, such as whether you want your franchise to be a sales oriented, or service type business.

 

With so many businesses offering franchising opportunities there are many ways to find available businesses. Some possibilities include visiting local franchise outlets that you may be interested in, attending a franchise exposition, or contacting a franchise broker. Franchise handbooks are an easy way to find franchise business opportunities. The handbooks are generally available either online or at a local library.

 

The Franchise Disclosure Document is a document about a franchise business that the franchisor is required to provide to you before you sign any documents or invest any money into a franchise. The purpose of the document is to help the buyer weigh the risks and benefits of owning that particular franchise. There are 23 specific items that are required to be listed in the document. By regulations these items must include information about the franchise, the franchise’s offices and about other franchise owners. The Franchise Disclosure Document is enforced by the Federal Trade Commission.

 

Having a clear picture of what your franchise business investment will look like will help in deciding in a franchise business right for you.

 

References:

  1. Federal Trade Commission. “A Consumer’s Guide to Buying a Franchise.”

9 April 2016

https://www.ftc.gov/tips-advice/business-center/guidance/consumers-guide-buying-franchise

 

  1. Federal Trade Commission.

9 April 2016

https://www.ftc.gov/

 

 

 

Franchising as a Business Format

Business Advice ConceptAccording to the Small Business Administration franchising as a business model is when a business owner of a franchise sells to an independent entrepreneur the use of the licensing trademark and methods of business of the franchise. Franchise business are also often called chains or store chains.

The International Franchise Association explains there are two main business models for franchising businesses: business format franchising and product distribution franchising. Product distribution franchising is sometimes referred to as traditional franchising. Between the two types of franchising models, the business format franchising model is the most commonly used. There are more than 120 industries in business today using the franchise format. These industries include automotive, lodging, fast food, real estate, and retail products & services.

The model for the business format franchise includes the franchisee selling to the franchisor the use of the trade name, products, services, and entire system for operating the franchise business. There is a continuous business relationship between the franchisee and the franchisor in this franchise business model. The franchisee offers to the new business owner a full range of services to assist with the franchise business. Each franchise may offer different services to the franchisor. Some of the services the franchisee may offer to the franchisor include selecting a site for the new franchise business, initial training, seminars, workshops, personnel, product, marketing plans, and financing assistance. Some of the day-to-day services offered to the new franchise business may include newsletters, toll free numbers, and websites.

The product distribution franchise format is the less commonly used franchise format. The focus of the product distribution franchise is the main product of the franchise. The franchisee manufactures and supplies the product to the franchisor to sell. This type of franchise model can be found in the bottling, gasoline, automotive and other manufacturing industries.

The trade name of the franchise or its product may be one of the main benefits of buying into a franchise business. A franchise with a well-known trade name or product with a good reputation will often have a strong pre-existing customer base. This increases the ability to draw in new customers much more quickly than if the product or trade name is unknown.

One of the fastest growing franchises in today’s business environment is the vapor store franchises. As the Researchandmarkets.com global market summary states, the global e-cigarette market is expected have a growth rate of over $50 billion by 2025. The e-cigarette market is expected to see a staggering growth rate through 2017.

Buying into a franchise business offers a new business owner a preset business model and built-in support system. This can enable the new business owner to be able to set-up and begin running his business quickly. Buying into a franchise with a well-known trade name or product will be a benefit with a pre-existing customer base. With Ongoing support from the franchisee, the new franchise business owner can navigate the steps of owning a new business and grow the business into a successful franchise business venture.

References:

  1. Small Business Administration. “Franchise Businesses.”

28 March 2016

https://www.sba.gov/starting-business/how-start-business/business-types/franchise-businesses

 

  1. International Franchise Association. “What is Franchising”

30 March 2016

http://www.franchise.org/what-is-a-franchise

 

  1. Researchandmarkets.com. “Global E-cigarettes & Vaporizer Market Analysis & Forecast Through 2015 to 2025” Summary.

30 March 2016

http://www.researchandmarkets.com/reports/3244019/global-e-cigarette-and-vaporizer-market#pos-2

 

 

 

 

 

 

 

 

 

 

Is Franchising Your Bag?

Depositphotos_56593593_m-2015Are you wondering what the hottest franchising trends are? Much of the recent success in that area is traceable to two demographic trends: Americans are getting older and feeling pressed for time. Doesn’t sound too bright, but it means booming business in franchising circles.

 

Now I am by no means a Franchise Guru. I’ve never owned one, worked for one, or even considered one and for good reasons.

 

First, when I started my publishing and publicity business I wasn’t flush financially enough to pay the “freight” on a franchise. Secondly, it seems too much like working for another corporate business to me. Things are done their way or no way, and you work for two – you and the piece the company takes. That doesn’t mean that it can’t be your cup of tea, because many entrepreneurs love franchises.

 

I’m not going to expound as a franchise expert, but rather I’ll give you the facts about the hottest ones to look at if you like franchises. Despite the status of the economy it seems the most stunning growth in franchises in 2004 has been in the senior-care segment. Seven senior-care companies ranked in the top 500 in Entrepreneur magazine have grown a total of 370 units in one year, and almost 39% in the past year.

 

Before anymore is said about the hottest franchises on the market, let me say one thing that might be obvious to most but some need to hear. If you do not have a passion for the market you are about to invest in then do not invest! You will waste your time and money on something that didn’t even being you any happiness. For example, if you enjoy electronic cigarettes or “vaping” then a electronic cigarette franchise would be a great idea to invest in. Individuals who vape generally spend a bit of time in vape shops and recognize the customers and how the business should be run.

 

Experts say that despite the large increases, this market hasn’t peaked yet. By 2010, 39 million Americans will be 65 or older, and that’s almost 20% of the North American population. About 30% of non-institutionalized seniors live alone, per the Dept. of Health and Human Services Administration on Aging. Many of them need extra help at home or companionship.

 

As the nation ages and boomers turn 60, this segment of the population will grow. “Elder care will replace child care as the number one social issue,” predicts Jeff Huber, vice president of Home Instead Senior Care – a franchise that grew from 356 to 448 units this past year.

 

The next hottest area is kids. Parents want their kids to have fun and be well-educated and will spend money to ensure this in good times and in bad. Children’s products and services segment of franchises have grown steadily over the year and become one of the top 5 overall categories in term of unit size in 2004.

 

What’s changed? Spending on children is now being fueled not only by baby-boomers, but by Generation X – a group that has $736 billion in spending power. Another change in the market in the past 25 years is the increase in dual-career families. According to some in the industry, this is an ideal time to enter the education sector of franchises for kids.

 

Kids’ fitness programs are also growing. Caryn Burnier, franchise sales director with Stretch-N-Grow International, says they have added 50 units last year. “We expect to see more children enrolled in fitness programs in the coming year,” says Jerry Perch, vice president of sales/marketing for the 92-unit Kinderdance International Inc. franchise.

 

Last, but not least, the tech industry is rebounding from its nose-dive in the past. This is because there is an increased dependence by people and businesses on their technology. People need advice on what to buy and what not to buy, and what is the proper solution to their particular need.

 

Computer Moms International Corp., a training and support provider, has seen a shift in its client base since it started 10 years ago. The greatest demand for services from the Computer Moms group has shifted to the business market, and the group added 30 franchises last year. The experts claim that the demand for quality full-service training and tech support is vast now and expected to become greater.

 

Following on the heels of those three areas are franchises in the area of Home Improvement, Fitness, Income Tax Preparation, Business Consulting, Specialty Ice Cream, and Coffee. So, if you’re in the market for a franchise type business pay heed to the up-and-coming hot leaders and let somebody else go for the 7-Elevens.

 

Buying into the Right Franchise

Man draws a green bulbIn today’s industries there are vast array of franchise opportunities available for entrepreneurs. Buying into the right franchise opportunity can seem overwhelming to a new buyer. Doing thorough research before buying into the franchise will help you overcome the hurdles of investing in a new business.

 

An important issue to look at in buying into the right franchise are the varied costs involved in purchasing a franchise business. Have a clear idea of the amount you are able to initially invest, and how much money you are able to continue investing as your franchise business grows. Franchise fees for the initially investment can run from the tens of thousands of dollars up to hundreds of thousands of dollars or more. Other investment expenses to consider are costs to rent a pre-existing office, store, building or facility, or the investment of building a new structure. Other start-up costs to consider may include equipment for the business, initial inventory, operating licenses, insurance, and promotion fees.

 

When buying into a franchise business it is important to consider the skills, training and education you already possess. Some industries and businesses require training, licensing or certifications for their owners and employees. Examples of these types of businesses may include real estate agencies, auto repair, interior design or tax preparation. Focusing your search for a franchise business you already have a background in narrows down the possibilities. Investing in a business you already have knowledge of will also decrease the learning curve in owning a new business.

 

Having clearly defined goals for your franchise business will also help you with buying into the right franchise. Determine the industry and type of business you would like to work in. This will narrow down the selection. Deciding what business model you want, whether you want your franchise to be a sales oriented, or service type business will also make buying into the right franchise easier.

 

There are many ways to find the right franchise business opportunity. Looking into local franchise outlets in the industry or business you are interested in is great opportunity to check out a franchise business in operation. For example, lets say that you enjoy electronic cigarettes and vaping and go into those stores on a normal basis. A Electronic Cigarette Franchise, similar to Vapor Galleria Franchise, would be a great next step in your franchisee pursuits. Franchise expositions, franchise brokers, and franchise handbooks are other ways to find franchise business opportunities to buy.

 

The franchisor is required by regulations to provide you with the Franchise Disclosure Document for their business before you sign and documents or invest any money into their franchise business. The Franchise Disclosure Document is required to have 23 specific items that must include information about the franchise, the franchise’s offices and about other franchise owners. The Federal Trade Commission is the entity that enforces the rules in the Franchise Disclosure Document.

 

Buying into the right franchise for your business takes time and diligent research. Establishing the goals you have for your franchise, knowing what type of business you want to invest in, and what type of services you want to offer before investing any time or money will go far in helping you in buying into the right franchise business.

 

References:

  1. Federal Trade Commission. “A Consumer’s Guide to Buying a Franchise.”

9 April 2016

https://www.ftc.gov/tips-advice/business-center/guidance/consumers-guide-buying-franchise

 

  1. Federal Trade Commission.

9 April 2016

https://www.ftc.gov/