What are the fundamentals of buying a franchise?

There is more than fast food involved in franchising, the list od franchises are endless.



If you are curious about franchising or wish to buy into one, the franchise governing bodies have research facilities and can help supply the answers you will need.

It is always advisable that anyone considering becoming a franchisee receives competent professional advice from qualified and experienced advisors. It is a specialised field of practice. A comprehensive list of service providers is available on in Franchise Business Directories.

The position of the franchise in the market in which it trades is a vital consideration. You should not only look at the particular franchised business in relation to its own activities but also make an assessment of the prospects for the overall industry of which it’s a part.

Most franchisors want ‘hands on’ owners People who not only keep the books and handle the finances but also provide customer service. Depending on the labour market in your area, you may or may not be able to hire employees to do all the repetitious mundane tasks.


“If you don’t like, respect and completely trust the franchisor, don’t take up their franchise”. Peter Sergeant


Although there are a growing number of professional franchises such as executive coaches and trainers, the vast majority of franchises involve basic retail and service businesses that require little education or sophistication. After all, if a business is complex and cannot be replicated easily, it probably cannot be franchised.


There are many different types of franchises

Franchises come in many shapes and sizes and if you are interested in owning a franchise there is sure to be one that will suit you. The franchise will either be dealing in goods or products or the provision of services.

Today there is a franchise operating in almost every type of business category, with varying levels of complexity and cost.

Franchises can be local or part of an international chain.


In all business format or package franchise programs, franchisors directly or indirectly collect payments from franchisees for the right to use their brand and to participate in their systems.

Franchise fees can range in price (for up-front franchise fees and set-up) from as little as $5,000 to as much as $1 million, or more. Typically, franchisees are also required to pay ongoing fees for franchise support, which may be a fixed monthly amount, or calculated as a percentage of turnover.

Fixed monthly amounts may range from $50 per month up, while percentage fees may range from 2% to as much as 15%. Additionally, a further fixed or percentage of the turnover fee may be applied to cover the costs of group marketing.


Initial assessment of a franchise

Because of the commitments that will need to be made it is important that prior to buying a franchise, you should do the following;

  • Assess your own reasons for wanting to own a business.
  • Assess the lifestyle and income implications of owning and operating a business.
  • Assess the franchise opportunities consistent with 1 and 2 above.
  • Visit a franchising trade show to broaden your outlook on
  • Contact the franchise trade association in your country for advice.
  • Build your understanding of the franchise relationship by reading the Franchise Guide.
  • Narrow your franchise search to a few systems, then request further information.
  • If appropriate, and you are comfortable with the decision, select a system and commence the application process.
  • Ensure you have adequate borrowing capacity, including working capital, to successfully establish this type of franchise business.
  • Be sure you receive and evaluate all disclosure material during the application process.
  • Be sure you receive legal and accounting advice from lawyers and accountants with franchise experience before making any final commitment.
  • Use the cooling-off period to check your facts and figures and determine if you still want to proceed.


Things you may need to know about yourself

In buying a franchise there may be some long-term commitments and it might be difficult to get out of, which makes it important to take the emotion out of your decision-making and address questions like the following:

  • Will my family be behind the idea of a franchise?
  • Will you become bored with the repetitive work involved?
  • How do I feel about dealing with the public?
  • How do I feel about being stuck in one place 24/7?
  • Do I appreciate the business model and will it work well for me?
  • Can the franchise operate without my day-to-day involvement?
  • Will I really like the type of people I would be involved with?
  • Is the proposed territory the right one for this type of franchise?
  • How will I be able to get out if I find I don’t like it?
  • Do I have other priorities in your life that could conflict?
  • Is this the best investment I can make for my future?


What should I do next?

As more and more large companies downsize, robotics and other new technologies replace employees with computers and outsourcing critical jobs, literally millions of people, many in their 40s and 50s, are looking for a new career opportunity. Many of them are thinking seriously about buying a franchise.

Why? Because unlike standalone small businesses, franchises can offer an increased degree of security, particularly if it is well-established.


“One of the things that would steer me away from a franchise is that I’m playing the same character all the time and I wouldn’t want to be known for that”. Saoirse Ronan


Please remember that you must not enter into self-employment and franchising if you are not prepared to risk losing your investment. You need to carefully balance the risks and rewards.

Before you do anything contact the franchising peak body in your country.


[read more=”Personal Experience” less=”Personal Experience”]

Personal Experience

There are no guarantees of success in any form of small business, and even though franchising is by far the most successful form of small business, it is still a business venture with many of the same risks inherent to any other business venture.

That risks should be fully understood and appreciated. The important thing is to only go into a franchise where you will really enjoy doing the work and the people you will be mixing with.




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