How independent can I be as a franchisee?
Your independence as a franchise owner will depend on the brand you pick. Every franchise has different guidelines for its franchisees, but generally, you’ll agree to follow your franchisor’s rules on selling products or services, branding, marketing, and business operations. For many small business owners, this is a benefit of franchising – having guidelines in place saves the work of developing a successful business model from scratch.
What are the advantages of franchising over starting an independent business?
Established franchises already operate on a successful business model, which you’ll access as a franchisee. But if you start your own independent business, you’ll be designing your business model from the ground up, leading to a higher chance of business failure.
It’s also easier to get funded with a franchise than an independent business. Many lenders are more likely to finance a franchise, with its proven model of success and brand recognition than they are an unknown independent business.
Other advantages of franchising include:
- Franchisor assistance with starting your franchise location
- Established operation if you buy an existing location
- Continued training and support
- Provided marketing materials and advertising
- Purchasing power from your franchisor’s vendor relationships
- Franchisor research and development
How do I pick the right franchise for me?
The first step to picking the best franchise fit for you is to figure out what type of business interests you the most. There are franchises in nearly every business industry, so narrowing down exactly what you want to do will help you discover the franchise opportunities available to you.
Next, consider what franchise model best fits your lifestyle. Do you want to want to be a solo operation or have employees? Do you want more free time or be deep in your business’s daily operations? How much money do you want to make? The answers to these questions will help you narrow down your search further.
Finally, the practicalities of your new franchise are a huge part of your choice. What is a reasonable cost for you to start or buy a franchise location? How much financing will you need, and how much can you qualify for? Is there a demand for this franchise in your location?
You don’t have to answer all these questions on your own. We’re here to help. We can answer your financing questions, connect you with the franchise you’re interested in to learn more, or set you up with one of our franchise consultant partners to help you find the franchise of your dreams.
Can I grow my business as a franchisee?
Generally, yes! As the owner of a successful franchise location, many franchisors will be happy to sell you another territory so that you can open another location. If you’re interested in keeping your current business but starting another franchise location, you can use your successful business as evidence of your worthiness as an applicant for a franchise and further funding. Usually, you can buy into a different franchise if it’s not a competing concept with your current business. Your franchise agreement will spell out these terms, so make sure you know your options before you sign it, especially if you know you might want to try a different franchise in the future.
Will it be harder to sell my business as a franchisee?
No. In some cases, it’s actually easier than selling an independent business. Franchisors are usually invested in keeping their locations in operation, so the brand you partner with may be able to help you find a buyer. This is called a ‘resale.’ Many franchises partner with a third-party like Guidant to provide seller support through business valuations to provide a fair asking price and resources to help attract prospective buyers.
What kind of franchises are there?
There are franchises in just about any industry you can think of, making it easy to find a franchise in the field of your choice. The most franchised industries are restaurants and hotels. According to the International Franchise Association (IFA), other common franchised service industries are:
- Home repair and remodeling
- Carpet cleaning
- Household furnishings
- Maintenance and cleaning services
The IFA also notes franchises are often found in business services such as:
- Mail processing
- Advertising services
- Package shipping
- Personnel services
- Printing services
Other commonly franchised industries include:
- Automotive repairs and services
- Environmental services
- Hair salons
- Health aids and services
- Computer and phone repair
- Clothing stores
- Children’s services
What metrics should I use to compare franchises?
There’s a lot to consider when you’re trying to decide on a franchise. Luckily, franchising is such a popular option for small business ownership that there are great resources to help your search. The International Franchise Association (IFA) recommends looking at these key criteria:
- Brand Name
- Training and Support
- Expansion Plans
It’s also important to understand a franchise’s financials to make sure you’re picking a brand with a proven track record and an attractive future. The two most important financial documents to consider are the franchise’s Balance Sheet and Income Statement. You’ll find this information in your Franchise Disclosure Document (FDD). FDDs can be complicated documents, but you can get help untangling the details with one of Guidant’s expert business consultants or through a lawyer.
How much money do I need to buy or start a franchise location?
The amount of money you need to start or buy a franchise varies depending on the franchise you choose. Costs can vary from a few thousand dollars for smaller or home-based franchises, while more well-known brands can cost over a million dollars. Many franchisors work with companies like Guidant to help you fund your purchase through financing solutions like 401(k) Business Financing, SBA Loans, Unsecured Loans, and more.
What are the challenges of starting a franchise?
It can be expensive to start a franchise, especially if you’re not buying an already existing location. Up-front costs include an initial fee to your franchisor, real estate, and building out your location to fit the franchise’s criteria. Typically, the more well-known the franchise is, the more expensive becoming a franchisee is. But you’re not on your own – most prospective franchisees pursue franchise financing solutions with suppliers like Guidant. Our team of funding experts can help you learn the best financing options for you.