Making the decision to purchase a franchise needs to be given serious thought, research and consideration of all options available.
Franchises have experienced annual growth of more than 50% - and are now also popping up in airports, railway stations and inside supermarkets.
There is intense competition for new franchisees -so don't bow to pressure to sign on the dotted line - until you are 110% certain that your decision is the right one for you.
With the huge choice of what to go into - home services, personal services, financial services, retail, fitness, food, health and beauty, etc, etc - ensure that the one you choose is aligned with your existing skills and something that you have a genuine interest in.
Attend franchising seminars and collect all relevant information and data. Make sure you ascertain details on: upfront franchise fees; training fees; location fees; and ongoing franchise and advertising fees.
Find out how long the franchisor has been operating; what training and support they offer; what track record they have; are they f inancially stable; do they undertake demographic checks on potential sites; the success rate of existing (and past) franchisees; and how much control they exert.
Remember - there are no guarantees when purchasing a franchise - success in one location does not automatically ensure success in another! Your franchise may not become the immediate gold mine that you envisaged -it may take several years before you even reach breakeven.
Analyze your costs and know your numbers: what is the ratio of the rent to turnover; salaries to turnover; fixed costs tofranchising seminars, turnover. If you are borrowing the start up costs - make sure you factor in your loan repayments. Research the best method of borrowing the money - a business loan, a business mortgage loan, interest and principal, interest only??
Be aware that if you fail to follow the guidelines as laid out in the contract - the franchisor may, with warnings, terminate the franchise agreement.
Ensure that you get written substantiation to cover any earnings representation.
And - most important - seek EXPERT LEGAL ADVICE - before signing anything!
About the Author:
Gay Redmile is the webmaster of several finance and investment sites. As she owns her own retail franchise she understands the importance of thoroughly researching all options before embarking on purchasing a franchise. For further information visit her site at http://www.franchisingsite.net.
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