– franchises

Three Things You Should Know Before Buying a Business Franchise

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Business franchise refers to the arrangement entered upon by the owner of a certain business with another party who is interested in running same business under its name. In the agreement, the real business owner allows the use of his registered trademark in exchange for some payment.

Business franchising is a strategy a lot of first-time businessmen take because there is lesser risk surrounding the setup. And more often than not, the franchise package includes everything you’ll need in launching the business. The business owner provides for raw materials, supplies, equipments, and all promotional materials. And because the business already exists, it becomes easier for the franchisee to build up its customer base.

However, there are some things you should consider before you invest your hard-earned cash on business franchises:

1. A percentage of your profit is paid to the franchisor.

You will be forever under the franchisee agreement for as long as you are using the name of their business. Part of the agreement is to pay the business owner royalties and other related fees. There’s no way to go around it.

2. You are allowed to seek support from the franchise owners.

Most business owners are more than willing to provide trainings to their franchisees to minimize errors while operating the business. It is your right as a franchisee to request for meetings with the bosses so they can help you out in certain things you are not very familiar with.

3. The business owner may restrict your choice of territory, suppliers, and employment policy.

Business owners want to have full control of each franchisee’s operation and quality of products. Therefore, franchise owners don’t really have much freedom when it comes to where they can get raw materials, equipments, and supplies for their business. This also means that it can be a little hard to reduce overhead costs.

These are the things that you should consider before you plunge into the franchise market. Try to determine if business franchising is for you. If ever it is, make sure you go with the company that’s tried and tested over the years.

How do I sell My Restaurant Franchise?

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Question: I am tired of running my restaurant franchise. How do I sell it?

Answer: Many franchisors face this same predicament. Not only are restaurant franchises resold every day, but it is very common to see all types of franchises for sale on the resale market.

The absolute first thing that you must do is to contact your franchisor. Do not be embarrassed! Franchisors expect that a certain percentage of their franchisees will someday want to sell their franchise. It is normal. There are many reasons for a franchisee to want to sell a franchise. Your reason for wanting to sell is probably a legitimate reason, something that the franchisor has probably heard many times before.

But probably the biggest reason that you need to contact your franchisor is that many franchisors will impose restrictions on franchise re-sales. For the most part these restrictions will follow closely with their existing guidelines used for recruiting a new franchisee. They just want the ability to approve any new franchisee.

Are you prepared to sell your franchise? Do you know what your franchise is worth? Will you need to carry financing? Is your financial information up to date? Have you talked with your attorney about the correct from of structure for a sale (asset based vs. stock based)? Are there property lease considerations? Will your landlord allow an assumption of your lease?

You have got to know the answers to these questions. Make sure that you are properly prepared to sell your franchise. You will need to research the marketplace in order to establish a price point. You may wish to talk to a Business Broker or other informed expert for guidance. Check with your accountant. He or she has probably seen a business or two that has been sold over the years. Lean on those around you for good quality advice.

Looking at many franchisor web sites over the last few months, many sites include a section on their web site for franchise re-sales. Consequently, your franchisor may be able to help you market your franchise for sale to others. There are other ways to sell an existing franchise. A good old fashioned newspaper ad can work. A more progressive way is to advertise your franchise for sale online with a web site that is designed to market your franchise. An example would be The Business Market which has a number of existing franchises for sale.

So donÆt be embarrassed… be proactive! You can do it!