Are Franchises a Good Investment?

For a long time, franchises have been growing faster than other types of businesses. Investors like the franchise option because they are able to put their money into a business with an established brand name with established customers who trust the brand to offer them a certain level of quality. With the training and guidance, you receive, you can more easily establish your business and start reaping profits sooner than the typical business eager for clients and recognition.   Statistics favor franchise businesses. The franchise industry has grown more than expected recently. The International Franchise Association (IFA) found that franchise businesses are doing better than non-franchise business. They predict a growth rate of 2.6 percent, about 20 percent higher than the competing non-franchise establishments. Franchisees are more “formula entrepreneurs” rather than normal entrepreneurs. A franchisee picks a business model that has already been tried and tested while an entrepreneur uses their own expertise to start their own business.  

First You Must Invest Start Up Capital

While starting a franchise business may seem like a great opportunity that can have you generating profits in a matter of months, aspiring franchisees need to invest startup capital. There are a number of fees you may have to invest before you get your franchise business running. First, the initial franchise fee is typicallly between $15,000 to $50,000, which in some cases may involve a fee incurred for training. The franchise fee for a Subway restaurant is $15,000. Getting the restaurant up and running would increase the investment to between $160,000 and $263,000.   

Due diligence is everything   

Investors need to perform adequate due diligence. For retail businesses, you need to find locations with reasonable rents. What workers are you likely to find in your desired location? Are you likely to find people with the training and licensing you need for your kind of business? Will you be able to find the consumers you are looking for to purchase the kind of quality you are offering?   You need to be passionate about the business you intend to dive into. Find a business that matches your interests, financial ability, skills and lifestyle. You need to enjoy being in the type of business you have chosen for yourself. All this comes easier for seasoned business people who have started other businesses. These are business people who you do not expect to make the schoolboy howlers that plague many businesses just taking off. To such entrepreneurs, there is the understanding that the business is not the end goal but rather a medium through which the end goal is achieved. A franchise coach can be an invaluable resource.

Look at the prevailing trends in industry  

The American economy is changing from a manufacturing economy into a technology economy. We are experiencing the same tectonic shifts that took place when the economy was shifting from an agrarian based to a manufacturing economy. Obamacare brought with it an implosion that is changing how medical services are offered and has opened the field for franchises to develop and be successful.   

Bottom line  

There are a lot of risks involved in a career change of any kind. People looking to enter new industries that they are not acquainted with are better off becoming franchisees. Though The odds are in your favor if you pick a franchise. You still need to do as much research as you can to make sure that you pick the right concept and a franchise coach can help in your search.

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Adam Goldman

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