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To Franchise or not to Franchise

by Tim Berry

When you are trying to decide whether to buy into a franchise there are several factors to consider.

First, make sure you are looking at a solid and effective franchise that offers real value. It has to be a good one. There are hundreds of good ones, but lots of bad ones too.

With a franchise, you are paying an up-front franchise fee and a percentage of sales—it can be a lot of money—to get two main benefits:

  1. A formula you can follow, a proven formula that guides you through the process avoiding expensive mistakes. The more detail, the better.
  2. National marketing to enhance your business with a brand name, television advertising, etc.

I would want to know about training costs, needs, quality and availability. I would also want to know from other owners how well the parent company meets franchisees’ needs regarding product and system-wide marketing. I’d want to know also whether their marketing actually works and how much supplemental marketing you need to do. Do they supply signage? Do you have any choice about signage, etc.?

I’d also contact your local business link (or some other local organisation with accurate demographics) and try to find out how many similar businesses there are in your area and as much information as possible about how they’ve done the last few years. Also whether the community is growing or shrinking and how the economy in general is doing.

Visit some other franchisees, talk to them, get as much information as you can. I’d talk to at least 10 other franchisees before I spent my money on somebody’s franchise formula business. I’d also find an lawyer with experience in this area, and go through with him or her some of the questions you should be asking. For example, is the franchisor going to protect your territory or sell another franchise across the street? How can you tell for sure? What guarantees does the franchisor make about national advertising, etc.?

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In the end you have to decide if the franchise costs are worth the money. Sometimes they are, and sometimes they aren’t.

{ 1 comment… read it below or add one }

Shaun March 15, 2010 at 2:16 am

Great article!

This article really highlights the very important points when considering buying a franchise. I would completely agree with all of the points mentioned and find it crazy that some people don’t actually don’t use this type of approach when spending their money, before they really know what they are buying into.

I think the other major factor when considering a franchise is that you have to choose one that you have a passion or interest in. Otherwise there will be no motivation for running the franchise which can be damaging.

I would defiantly recommend reading this article and use the points mentioned as a guide to buying a franchise. There is also one other website which I found to be useful, as it not only provides advice but also advertises a variety of franchises available to buy. The website is,

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