Category — Franchising

Operating a franchise requires ingenuity as well as conformity.  The creativity is unique to each franchisor, but the laws governing the franchise industry are created by a bureaucracy within the United States government.  To ensure fair play and uniformity within the franchise industry, the Federal Trade Commission (FTC) has created rules and guidelines that all franchises must follow under penalty of law.  Originally implemented in October 1979, and amended July 2008, these rules are for the protection of the franchisor and franchisee – making sure that vital information is disclosed.  The amended Franchise Rule is the only format that can now be used, and it dictates what is expected of the franchisor.  Here are the key components of the amended rule.

Each franchisor is required to give prospective franchisees material information prior to them becoming a franchisee.  This means that a potential franchisee will need to receive background information, business costs, legal obligation of both parties, company statistics and audited financial information about the franchise business.  These mandatory records are a safeguard against you being accused of hiding chief aspects of your franchise from those who might want to become a franchisee.  This way, a franchisee will be unable to claim ignorance of financial risk with regards to the business and assert that they didn’t have the whole story.  Likewise, this precedent lays out what a franchisee can expect from you (building maintenance, product quality, etc.) so that you only have to supply what is in the agreed-upon terms, and the franchisee will know exactly what to expect.  Read more... (459 words, 1 image, estimated 1:50 mins reading time)

If you are looking to start a business that will succeed easily and also earn you a steady income, getting a franchise is a great way to start. Although some costs are involved when you go about leasing or purchasing a franchise, you can be assured of decent returns on your investment. Here is some more information on franchise opportunities-

Why Purchase a Franchise?

You could easily start your own business instead of purchasing a franchise. However, when you buy franchise you automatically inherit more than just a business opportunity. You now have a ready-made time tested and successful business model and all that you need to do is work according to the formula. Success is almost guaranteed. For instance, if you want to open a food mart you are going to have to spend a lot of time and money to draw customers to your place.

Building a brand value for your product is very important when you want profitable sales that sustain themselves over a period of time. This is the best advantage of buying a franchise. You get to sell a product that has already been successful elsewhere; you buy a ready to use brand value.

]]>

Selling an already established and successful product is quite easy compared to the time you would have to spend in building your own personal brand. There are many other benefits of purchasing a franchise too. Most businesses that are willing to sell franchises of their business to other people also offer complete business solutions training package and on-going support along-with.  Read more... (499 words, 1 image, estimated 1:60 mins reading time)

Albert Einstein once said about filing taxes, “This is too difficult for a mathematician. It takes a philosopher.”  While I don’t think that Einstein was a franchisee, it’s easy to see how many people in the franchising industry could share his opinions.  So, what is franchise tax, and is it really that confusing?  A franchise tax is a tax levied by a state on a business owner, for the privilege of doing business in that state.  Every state calculates this tax differently, often on an individual basis.  It certainly can get confusing, with factors such as the taxpayer’s net worth, net income and amount of stock sold in the mix, and it is advisable for every franchisee to seek professional counseling to complete a franchise tax return correctly.

Not only do the franchise tax rate calculation methods vary from state to state but the percentage that must be paid varies as well.  Some states, such as Delaware have a higher franchise tax percentage rate.  Some, such as Nevada, have none at all, or a small flat fee.  Bonus for you, Nevada!  When doing research, a helpful hint you can use is that states with higher corporate tax rates have lower franchise tax rates.  When you are doing your franchise research and evaluating locations, tax rates can have a big impact on your decision.  Read more... (446 words, 1 image, estimated 1:47 mins reading time)

Even in today’s troubled economy there are numerous ways to invest to secure your family’s future.  One way this is being done is by buying into a franchise business.  Becoming a franchisee can be a great way to see a return on money invested but it’s never a sure thing.  There are many aspects to the franchise industry that can be misleading to a potential franchisee.  Research data can be skewed, risks to the franchisee can be downplayed and potential profit figures may be inflated to make buying in seem like a great deal.  Oftentimes, franchisors aren’t doing anything except furthering a potential franchisee’s ignorance of what is franchise fact and what is fiction.  A potential franchisee is left to sort the myths from the truths on their own.

Myth #1:  The most expensive franchise opportunities will bring the most profit!

Wrong!  Oftentimes, it’s the complete opposite.  The more cash you have to sink in the beginning, the longer it takes for you to turn a profit.  Franchisors are free to set the prices for their initial franchise fees and are not indicative of a healthy business chain.  You will need to do your own research on market conditions, location and the efficiency of the business model the franchise organization has in place.

Myth #2: The bigger the franchise, the more likely you are to succeed!

]]>  Read more... (528 words, 1 image, estimated 2:07 mins reading time)

For business owners considering entering the world of franchising, a franchise consultant can be an invaluable source of information and resources to help you assess your options and decide how to best proceed.  Their purpose is to guide you through the franchising process, and offer their step-by-step expertise and recommendations, beginning with the first evaluation to the final signing of the franchise contract.

Some services franchise consultants offer:

Impartial Evaluation: When analyzing your business model, a franchise consultant will be able to assess whether you have a valuable and/or unique product or service to offer in the current marketplace and what will make your business stand out from the rest of the crowd. Without an angle to make your business distinct, it will be difficult to market it to potential customers.

]]>

Market Analysis: Franchise consultants will analyze the current market trends and available resources to determine if there is sufficient demand for your products and services in the marketplace.Armed with this information, you will be able to make an informed decision as to whether franchising is the best way to expand your business or not.

Financial Analysis: A franchise consultant can also help you determine the amount of money that will be required to get your franchise off the ground. There are many expenses that will have to be considered – including franchise lawyer fees, accountant fees, and marketing expenses – all before you ever see a dime of revenue, so it’s important to know where you will stand financially during the entire franchising process.  Read more... (296 words, 1 image, estimated 1:11 mins reading time)