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

A formula for success? Find a franchise to fit your life.

Everyone wants it, admires it, strives for it, but what exactly defines success depends on who you ask. So when you want to start your own business, first you have to decide what you mean by success.

Not only are there different kinds of success — think Wall Street Banker with a seven-figure income or principal of a highly regarded high school — there are also different levels of success, such as entry into the college of your choice, achieving a happy marriage while having work you enjoy or completing a marathon. Each can be as satisfying and validating as the next.

The definition of success, like beauty, really is in the eye of the beholder.

When it comes to your career, some people care most about maximizing their income and enjoy working long hours in a job they love. Other folks prefer a niche that allows a healthy work-life balance: time for family, hobbies, play and work, in no particular order.

The hardest part of all may be deciding what works for you because if you start down a path but take no satisfaction from your promotions or fattening paycheck and only daydream about hobbies left unexplored, you won’t feel successful.

When you seize an opportunity to start your own business and take charge of your career, you have the ability to carve out the perfect future for yourself.

In the wide world of franchising, with some 1,000 different franchises across 75 industries, you can find a franchise for every lifestyle choice, from those that require only part-time work to others where you might aspire to one day own multiple units and build a mini-empire.

So before you get into the nitty-gritty of starting your own business, answer for yourself what you mean by success. Then consult a franchise coach who can help you choose a franchise to suit your life.

Consider the various ways people define success then rank them in order of importance for you.

Is success:

  • Getting rich?
  • Enough money to buy a house?
  • Having a job that you love?
  • Having a family?
  • The ability to send your children to college?
  • Having the time to give back to your community, whether that means volunteering at your
    local food pantry or serving on the PTA?
  • Having a spiritual life, full of exploration and learning?
  • Combining the goals of your life and your career, which may mean working in health care or
    education?
  • Making a contribution to a goal larger than yourself, such as making the world a better place?
  • Feeling self-worth?
  • Being happy?

The list represents a continuum, from goals most associated with money to those completely disconnected from income. Which end are you on?

So think about what you want from your life, then I can offer multiple ideas for franchises that allow you to have a career that gives you the life you desire.

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 (215) 367-5349.
© Dan Citrenbaum 2019

Achieve Work-Life Balance in the American Workforce —Start your Own Business

If you thought tech companies were the new frontier for work-life balance, think again!

With the recent news of the personnel horror stories from one of the tech behemoths of the Northwest, discussions on social media about how to achieve optimum work-life balance are off the charts.

The sad fact is, when you throw your lot in with a big corporation, you give up control. Most American companies provide more lip service than actual quality-of-life perks.

Many give far fewer vacation days than their European counterparts, and whether it’s corporate culture or peer pressure, American men and women take far shorter leaves after the birth of a new baby than in corporations in most parts of the globe. And most can forget about seeing their children’s afternoon soccer games or track meets.

The one way to get the balance you need to achieve fulfillment from family as well as work is to own your own business. And one of the quickest, low-risk ways to get started is with a franchise.

That’s because a franchise comes with everything you need to help you achieve success. There’s no guess-work here. All the details — and the kinks — have already been worked out for you. What you get for your money is a complete operating system, as well as ongoing support and training.

Even better, you get a network of franchisees, who can offer you advice based on actual experiences. The most important time to tap into this valuable font of knowledge is before you sign any contracts.

Current and former franchisees will give you the truth of their own experience, how the franchise has worked for them and which skills and experiences help them the most with operating the business. Former franchisees can tell you what didn’t work. Talk to as many as possible.

The other great attribute of franchising is all the great information available to you in the Franchise Disclosure Document, which the Federal Trade Commission requires all franchisors to disclose to potential franchisees.

You can learn all your upfront costs, the history of the franchise and its executives and some franchisors even report franchisee earnings.

What’s so great is that all this available information gives you the ability to select a business that will perfectly suit your individual experiences and interests.

With so many options available in the world of franchising, from business to business services to retail operations, there’s no time like the present to explore your options to find the balance you can now only dream about.

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