Worried About Starting Your Own Business? Try A Franchise

Tired of having little control over your work life? You may be ready to take the leap and become your own boss. Before you balk, owning your own business isn’t as risky as it sounds. In fact, if you look before you leap, the potential upside should outweigh the risk. For one thing, you don’t have to start from scratch. You can find a tried and true method for starting your own business that comes with all the systems in place, from a marketing strategy to IT. All you have to do is choose a franchise that stands up to high-level scrutiny and meets your own business and personal criteria. And you can forever slip off the constraints of punching someone else’s time clock. The franchise business is a far cry from your father’s idea of franchising —which grew quickly along with interstate highway system in the 1950s and 1960s and primarily comprised fast food joints and hotels, notably McDonald’s and Holiday Inn. Today, the franchise business is a far bigger pie than you probably realize. Franchises operate within 75 industries and encompass far more than fast food. In fact, whatever business you started in most likely has applications in some type of franchise business. A franchise coach can help you choose from a wide array of opportunities in businesses as diverse as direct mail, maid services and senior care services. These and similar service businesses are expected to lead the growth in franchising over the next year, according to the International Franchise Association. The key to recharging your career in a franchise is to answer the question: Which franchise is right for me? First, you’ll want to assess your skills and experience, along with your interests. What do you want to spend your days doing? Or maybe you want something where you can work less than full time. All is possible in the world of franchising. How do you know it’s a good franchise? You just get the Federal Trade Commission required disclosure document from the franchisor, read it, and start calling franchisees. They’ll tell you. The more thorough your research, the better off you’ll be. Before you spend a dime on your new business, you can learn about the franchise company’s:

  • Support services
  • Training
  • All upfront and ongoing costs
  • Number, location and success rate of franchisees
  • Financial condition, bankruptcy and litigation history, as well as the executives’backgrounds
  • And, most importantly, firsthand testimonials from franchisees on how all this actually works

As you gain skills as a business owner, your long-range earnings potential exceeds what you will likely earn as a cog in the wheel of corporate America. Most people realize that when you work for corporate America you probably make a lot more money for your employer than you make for yourself. When you own a successful business, you can keep both of those types of profit for yourself. When you work for yourself, your risk can actually decline over time because your employees are better trained, your suppliers are more willing to give you special terms and your customer base is more established. Best of all, you control your own destiny. Certainly, franchising isn’t for everyone. If you’re the type of person who wants to make a unique impression in the market and you don’t wish to follow someone else’s system, then do not buy a franchise. You may instead want to consider buying an existing business or starting your own. But if you can follow a simple set of guidelines, you might be able to find wealth, liquidity, and success through a franchise. Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today! Contact Dan Citrenbaum to help you create the career you’ve always wanted. Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484)278-4589.

Wondering when the profits will start rolling in? Find out before you invest in a new franchise!

So you’ve selected a franchise and have your initial investment capital saved and now you want to know: How much money will I make?

To answer the question you’ll need to weigh your costs against expected potential revenues.

The beauty of a franchise is you actually have a good shot at figuring all these numbers out. Between the financial disclosure document (FDD) and information available from existing franchisees, you can get a good feel for expenses, as well as potential revenues, so long as you factor in differences related to location, local market and, not to be forgotten, the range of talents and experience individual franchisees bring to their businesses.

Why is it so important to do this math upfront? In a phrase, operating capital.

Lots of folks eager to become entrepreneurs for all the usual reasons —to control your own schedule, achieve work-life balance, be your own boss, and make more money —may neglect to factor in all the capital requirements.

At the beginning of a new business comes the transitional stage. This means you need money to run your business until you learn your way around a new market, new procedures and customer care. During this transition, you won’t generate enough revenue to cover expenses. So it’s essential you have enough capital to keep the circuits humming.

Your first task is to get a realistic sense of how much capital you need to get started. Fortunately, the FDD will provide this view of your costs. Some companies will even provide an idea of potential earnings. A franchise coach can help guide you through the process, but it’s never too early to start your research.

Three Keys to Understanding Your Potential Earnings

Know your Timetable

Most businesses take three to 12 months to start earning profits. The slowest to become profitable are franchises with a lot of costs or ones that take longer to build a customer base. And if the margins are thinner, you need to generate more volume. For example, a document shredding franchise, which requires expensive equipment, may take as long as 18 months to run in the black but can eventually become quite lucrative. Retail franchises can be among the quickest to turn a profit because a good location will quickly draw customers.

Accurately Estimate Your Fixed Costs

The franchise disclosure document provides a list of all your costs —everything you need to open —which are far more extensive than just the initial franchise fee. Examples of the types of fees you’ll find under Items 5 and 6 in the FDD are: IT and system setup and initial marketing. Then comes ongoing fees, such as local marketing additional training, ongoing IT or software costs, costs for audits, insurance, and on and on. In short, all of the costs you would expect to encounter.

In your calculations, you should also factor in the cost of consulting an attorney and accountant, which we strongly recommend.

Estimate Potential Income

Flip now to Item 19 of the FDD to read if the franchisor has made any earnings claims. Only about one-third of franchisors make earnings claims, and how franchise companies address this issue varies.

To fill out the picture, your most important information can be found in Item 20, where you’ll find a list of franchisees. You want to call as many franchisees as possible, preferably those operating in locations similar to yours, to verify all the information in the FDD and get an idea on profits. Word to the wise, avoid the question: How much money do you earn? Instead, try a softer approach, such as: “How long until I can expect to make $100,000.”Then try out different income amounts.

All three steps are essential to your preparation. Doing the due diligence required to choose the right franchise upfront will help you experience the pleasure of being your own boss for years to come.

by Dan Citrenbaum, a Franchise Coach and Entrepreneurial Consultant who helps people achieve their dreams as small business owners.  He offers free evaluations to find out what option might be the best for you.  Find Dan at www.TheEnterpreneurOption.com.

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Want To Buy A Franchise? Don’t Forget To Consult An Attorney!

Thinking about buying a new business or franchise? Then Caveat Emptor! The best way to protect yourself from stumbling into a bad deal is to carefully research your new business niche and consult a knowledgeable franchise attorney. Buyer beware, often considered a consumer warning, applies just as strongly to those thinking of buying a business. In the world of franchising, federal law has established disclosure rules to help people make wise choices. Still, it pays to consult an attorney that specializes in franchising. Of course, any franchise coach or attorney will advise prospective franchisees first to read the franchise disclosure document (FDD), which the law requires be written in standard English, so it can easily be understood by the non-lawyer. You still need a lawyer who specializes in franchises to review the franchise agreement or contract to make sure your interests are protected. Since experienced franchise lawyers know firsthand where franchisees get into legal difficulty most often, they can help you avoid the pitfalls that may exist in some franchise agreements. Most of the items in the FDD are incorporated in the franchise agreement, but an attorney can help you review the first four items, which provide background on the business and its senior executives, most particularly whether they’ve been involved in previous litigation or bankruptcy. And while there are costs involved, you can find an attorney who will provide these services for a flat fee. You should consider it part of your cost of getting into your own business. “I get phone calls daily from people who did not consult an attorney upfront,” said Nancy Lanard, a Philadelphia attorney who specializes in franchise law and works with clients across the country. “It’s much harder at that point.”

Legal Checklist For Franchise Buyers

Before buying a franchise, be sure to review this checklist:

1. Review Franchise Agreement

Five or 10 years ago, most franchise agreements were completely non-negotiable, Lanard said, but now she negotiates non-material changes to most franchise agreements to protect the interests of the franchisee. Franchise companies are reluctant to negotiate any material changes for an individual franchisee because it would require them to revise their franchise disclosure document, an expensive proposition, she added. In her review of the contract, Lanard looks for issues that might create undue financial burdens on the franchisee, including how notice on default is handled and remedies applied.

2. Check Trademark Registration

Since the trademark is “the cornerstone of what they’re buying,” Lanard’s firm checks the trademark registration to make sure another firm isn’t operating under the same trademark in the designated territory — not an unknown occurrence.

3. Set Up A Legal Entity

Lanard strongly advises franchisees to set up a legal entity before signing any agreement with a franchise company to protect themselves from third party claims. Each location should be a separate entity, she added. Her firm charges a separate flat fee for this service.

4. Negotiate A Lease

“A lease can make or break a franchise,” Lanard said. Good franchisors should offer help finding a good location. They might have demographic studies and a great relationship with local brokers. They also can evaluate the lease from a business perspective, help negotiate good business terms, favorable rent, build-out costs, renewal terms, and so on. “Leases are highly negotiable,” Lanard said. A lawyer can protect the franchisee from onerous costs that landlords may try to impose, and a good lease can save a lot of money over the long term. A separate flat fee is charged for this service.

5. Protect Territory

Disputes over territory are “probably the No. 1 litigated area of franchising,” Lanard said. A good franchise attorney will make sure that the language in the agreement regarding territory affords the franchisee an actual separate, exclusive territory. A cautionary tale is a franchise that set territory based on zip code, which allowed franchisees to open across the street from one another — not a great way to stay in business.

6. Generally Good Advice

Likely topping this list will be for prospective franchisees to carefully study the fees and other costs — items five to seven in the FDD — required to set up a franchise. Take the most conservative approach since many businesses fail as a result of having insufficient capital to sustain the business until it can operate in the black. Good research cannot be over emphasized. Lanard tells a story of a woman who phoned, excited about purchasing the franchise of her dreams in the automotive sector, a franchise she had aspired to operating since she was a little girl. While she wanted Lanard to review the franchise documents for her, Lanard suggested she interview franchisees to see if they were satisfied with the franchisor’s support and training. When the woman called back, she reported that all the franchisees she spoke to were unhappy and wished they had never bought into the franchise company at all. Better to face this type of disappointment than the losses that can accrue as a result of signing a bad contract and trying to to fix it later. Ready to make your dream of becoming an entrepreneur come true?

Get your free evaluation today!

Contact Dan Citrenbaum to help you create the career you’ve always wanted. Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484)278-4589.

Always wanted to own your own business…but you hate sales? Fear no more!

Just because you don’t like sales doesn’t mean you can’t own a business.

That’s right. Contrary to popular belief, you can be a successful entrepreneur even if your strength doesn’t happen to be cold calling and glad-handing.  If you visit a McDonalds the owner probably is not trying to close you on buying a burger.  And the same holds true for many other types of businesses.

Opportunities abound with businesses whose customers are drawn in by an effective marketing campaign, a great location, or strong advertising.

And you don’t even have to be an expert in a particular business to get going. All you need is to connect with a good franchise operation that matches your interests and skills, and you can get all the marketing and advertising expertise to help you get going.

The trick is to capitalize on your strengths and let the franchisor fill in the gaps.

Some large franchise organizations rely on national advertising and marketing programs to generate business. In addition, customers often actively seek out a conveniently located operation, often without realizing it’s an independently owned franchise.

Just to give you a taste, here is a small sample of franchise types that fit these categories:

  • Electronics sales and repair
  • Fitness and Gyms
  • Sandwich shops
  • Hair Salons
  • Residential painting and maintenance
  • Package and Ship businesses
  • Massage therapy studios
  • Academic tutoring

The trick is to make a good match with a franchise that has an established record of working to develop new franchisees into successful members of their team. That’s where working with a franchise coach can help you use your time most efficiently.

Let a franchise coach direct you to operations that have the best time-tested systems and a solid track record. Best of all their services are free since they’re paid by the franchisor.

You would then be responsible for talking to as many franchisees as possible. Use their experiences and advice to help you determine if an operation is, in fact, a good match for you.

Ready to make your dream of becoming an entrepreneur come true?

Get your free evaluation today!

Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a franchise coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-4589.

© Dan Citrenbaum 2019