Information on How to Buy a Franchise

Tips on Finding the Right Franchise Business Opportunity

There can be a large variety of rules and regulations when buying a franchise business. Discover some of the types of franchise opportunities and associated costs.

When buying a business franchise, there are usually fees involved. Depending on the type of business, the method of calculating associated costs or fees can vary. Franchise fees can be a major expense and should be carefully considered to the expected return on investment. This article looks at some of the different types of popular business franchises and the method of calculating fees.

What is a Business Franchise?

A franchise is like a license to use the trademark name to sell specific products or services. Most franchises start out as an independent business. Once they become successful, they may try to expand by offering their business model to other potential business owners. Once a potential business owner agrees to the terms of the business model, a franchise agreement is written with certain stipulations that must be adhered to by the new franchise owner.

Types of Business Franchise Opportunities

There is a multitude of different business franchise opportunities. The following are some of the more popular category types of business franchises.

  • Food
  • Automotive
  • Home Based Business
  • Cleaning and Maintenance
  • Retail
  • Business Services
  • Mobile Business

Business Franchise Costs and Fees

Franchise cost and fees can vary widely depending on the type of business. Name recognition can also have a major impact on costs. For example, the fees for buying a McDonald’s franchise would be considerably more expensive than buying a fast food business that is not widely recognized. Some of the following are costs and fees that can be part of the agreement.

  • Startup Fee
  • Percentage of gross sales
  • Percentage of gross profit
  • Advertising fees
  • Administration fees
  • Legal fees
  • Research Fees
  • Training Fees

Besides some of these fees, there can also be minimum inventory requirements. Specialized equipment may also have to be purchased as a requirement of the agreement. Product uniformity can also be a part of the agreement where certain products must be purchased from the franchiser.

Advantages of a Business Franchise

Purchasing a franchise can be quite an expense, but there are also some advantages to owning a franchise. The following are some of the advantages of a business franchise compared with an independently owned business.

  • National advertising
  • Nationwide warranty and service
  • Name recognition
  • Specialized training
  • Product liability
  • Standard computer systems

When considering purchasing a business franchise, some research can help to make a sound financial decision. Weight the costs involved against the benefits. Create a business plan to help ensure a decent return on investment. Talk with other business owners that operate the same franchise that’s under consideration. Visit their business to get an idea of what’s involved in daily operations.