Buying a franchise is a good way to start a business. You are buying into a business that has already established itself, meaning some of the work has been cut out for you. But before you spend your money on it, doing some research will help you decide if this business model is suitable for you. Here is a guide to what you should know.
What Is a Franchise?
This is a business model where the owners provide the entrepreneur with a business that already has procedures, strategies, processes, and branding in place. In return, the owners or corporation charges the entrepreneur a flat fee plus other fees based on sales or profits.
How to Buy a Franchise
Here are the basic steps involved in franchise ownership.
Be certain it is what you want. That means researching why franchising is a good idea for you.
Research which franchises you want to buy into. (Check the market, local competition, a good track record of sales, etc.)
Start the application process. Expect the franchisor to screen you in terms of finances, business location, and business plan.
Set up a meeting which is a chance to get to know the franchisor
Apply for financing. This is an important step as it will determine whether you can open your franchise
Reviewing contracts. It is best to hire a business attorney for this process
Finding a location
Hiring staff
This process is usually lengthy. But being thorough at every step will ensure you are making informed decisions.
What Is the Initial Investment Cost?
The cost will vary with the franchisor you are working with. You may be required to pay an initial fee before you even start operating, which can be $10,000 to $100,000. There are also ongoing royalty and marketing fees which are determined by the amount of money your franchise makes monthly.
Finding Financing
Of course, you will need a business loan to fund the business. You have many options for getting a business loan. You can get the traditional loan from a bank, an SBA-backed loan, partnering with a funder, etc. Understand each and choose the one that works for you best.
At Skogen Capital Lending, we are dedicated to helping you achieve your business goals. Get in touch with us to understand your franchise financing options and how we can help.