Franchises are everywhere today and provide extraordinary opportunity for individuals seeking business ownership and for Realtors® wanting to assist buyers and sellers. Some examples of the franchising impact on a global basis include McDonalds and Subway with over 31,000 locations and 7-Eleven with over 30,000 locations.
McDonalds has franchises in 119 countries making one wonder; who on earth hasn’t had a Big Mac and fries? Virtually any concept you can imagine is offered as a franchise. So what, you might ask, makes a franchise business so desirable? A recent ad in Business Week succinctly states the conventional wisdom on the risk involved in entering self-employment by purchasing a franchise: “A franchisee has a four times greater chance to succeed than an entrepreneur who launches a new independent business.”
Which is right for you?
You can choose a franchise concept that interests you without having any prior experience since the franchisor provides instant name recognition, a business operations system, comprehensive training and ongoing operations support. Capital required to purchase a franchise varies from tens of thousands of dollars to millions of dollars.
You can also find franchises that are home based, mobile or site based. Some concepts require you to lease space while others allow you to own the business property. Some franchisors offer Master Franchise Agreements that allow the Master Franchisee to open multiple locations within a defined area. You may even find a franchisor offering Area Development Agreements enabling you to sub-franchise the concept and share in the royalty fee revenue generated by your area franchisees.
Realtors guide the way
Franchisors are in business to light new signs so they are always searching for acquisition candidates. A Realtor® can refer you to franchisors and their commission is not due until you sign a franchise agreement. They can also assist you with finding a property to lease or purchase as well as help existing franchisees that want to offer their franchise for sale. In fact, many franchisees prefer to work with a broker when listing their franchise.
The terms of the franchise agreement specify terms and conditions that must be satisfied to facilitate the transfer of a franchise. Franchisors may have the right to purchase the franchise resale and always reserve the right to approve the prospective franchisee. You must also complete franchise training prior to closing the transaction.
How to get started
So, whether you’re an individual considering business ownership or a Realtor® wanting to expand your business, you’ll find franchising to be well worth investigating. Franchisor websites are a great place to start as they provide excellent introductory information. You can visit franchises you are interested in and usually speak to the franchisee about the concept and their experience with the franchisor.
When you request franchise information, you will be contacted by a franchise development representative and be provided a highly detailed and comprehensive Franchise Disclosure Document (FDD) for your review. The FDD is a time sensitive document that must be in your possession a required period of time prior to entering into a franchise agreement.
Take a closer look at franchising and see if it can help you achieve your goals. Your comments are appreciated.