There are many people that are starting to seriously consider entering the franchise business. A key question you should ask yourself is what can I do to prepare myself to become a successful franchisee? Here are some ways you can set yourself up for success.

First and foremost, you want to really evaluate who you are and what you are truly interested in. Think about the places you’ve worked in the past and think about what you liked about the job, what you didn’t like about the job, what you like to do in a work environment and so forth. Another question to ask yourself is how you feel about risk. How much money are you willing to put on the line? How long can you operate without an income from your franchise? What are your goals for owning a franchise? Once you figure out the answers to these questions you should have a better understanding of what area of franchising you want to go into and your long-term goals.

Second, you want to narrow down your opportunities. Start thinking about what you’ve done in the past. Then go through and ask yourself if it matches up with what you decided you want. If not, move on and look at more options that will be everything you want.

Third, make sure to research and make sure the franchise is exactly what you want. Call some of the franchisees and see how the business is going. Let them know your personal goals and ask them if you think you will achieve them in the franchise. Shadowing a franchisee is another good way to know the inside of the franchise. Ask if you can shadow for a few days. This will open your eyes to what you’re really getting yourself into. Next, you’ll want to talk to the franchisor. Be direct and frank with him. Let him know your goals and plans. This is open the line of communication and they will be frank with you in return.

After doing these things, you should have full confidence that you have done all you can do and are ready to make a decision.

Good Luck!

Thinking of buying into a franchise but don’t know where to be careful with your money? Here are some tips from franchisees on what areas to make sure you don’t spend more than you need to.

Lease terms are a big area franchisees said they regretted how much money they spent. Most franchisees use a leased space. You want to get your lease rate as low as possible in the beginning because when first opening a business you usually do not make any profits. Another reason to get your rates as low as possible is because prices escalate as time goes on. It is suggested that you try to get the first 3 to 6 months free in the beginning. If your landlord agrees to let you have the first 3 or 6 months free, rent may go up later on in the lease. Even though your rate may go up, you are saving thousands of dollars in the long-run.

Another mistake a lot of franchisees made was assuming that construction costs were what they were and accepted how high the cost was. Do not assume this. Look around. Compare different contractor’s prices.

Business Equipment is another area many franchisees waist their money. An example of business equipment is things such as ovens or cash registers. Franchisees have suggested that one should shop around or that one should look into buying used equipment. Another suggestion was considering different loan options.

In the category of inventory, you should definitely ask what ways they have learned to save in this area. You usually don’t have as many options in what suppliers you use.

Advertising was an area that franchisees had wasted a lot of money as well. Advertisers call and try to get franchisees to think that their franchisor has cheated them on advertising and then try to get the franchisees to put in more money.

Labor costs are another area that franchisees spend too much money. Franchisees either pay their employees too much or hire too many. It takes a lot to stick to your guns on the decisions you decide in the beginning about labor.

These are just a few areas that franchisees make mistakes in how much they spend. Be wise and learn from their mistakes. Do lots of research and truly know what you’re getting into.

Have you considered investing in a home-based franchise? Maybe when you think of franchise, you think of McDonalds or Seven-Eleven. However, there are so many other options apart from fast food and convenient stores. Many of them can be run as home-based businesses which will save you money. Here are examples of types of businesses that can be home-based.

Bookkeeping is a major one. Many companies are actively looking for franchisees to grow their company. CFO Today and Padgett Services is a couple of companies that are looking to expand.

Another type of business that can be home-based is computer-repair. Are you someone that people call when they have a computer problem? Then maybe this type of business is for you. Geeks On Call and Rescuecom is a couple of franchises that allow you to be home-based.

A cleaning franchise can make a good home-based business as well. People always need help cleaning and usually want to go with a company name that is known. This is why it is sometimes best to go with a franchise instead of making your own company. CleanNet and JaniKing is a couple of cleaning companies that are well known.

Animal lovers can also invest in a home-based grooming or pet care franchise. An example of this kind of franchise is Canine Campus.

Many carpet-cleaning businesses are home-based. There are a ton of national carpet-cleaning franchisors. ServiceMaster Clean and ChemDry is a couple of those.

These are just a few options for a home-based business. There are tons of options so you are pretty much guaranteed to find a home-based franchise that is a good fit for you.

Good luck on the search!

When looking for a franchise to invest in, you need to look into their franchise lawsuits. By law, all franchisors must provide a UFOC which contains significant information about the company. This document also contains information about litigation that the franchise has been involved with. It is important to understand why the legal conflicts came about. Franchisors usually instigate litigation when a franchisee does not follow through with contract obligations. Franchisees usually instigate litigation because they are unhappy with their business. They may not get along with the franchisor or they are not making enough money. The problem is that franchisors are much more careful to follow all the obligations they signed for but do not assure that the franchisee will be happy or make any money. You can avoid any lawsuits by really understanding all that you are getting into.

If you end up uncovering a lot of litigation between a franchisor and its franchisees, I would advise that you do not get involved with that franchise. No matter what party instigated the litigation, the amount of lawsuits should be small. Look at the total number of litigations for the past two years and see what their percentage is. Less than 1% is what you want. If it is more than 4 or 5%, I advise you not to invest. Even if there is a small percentage like 1-3%, you still want to do some research and find out what the nature of the litigation was.

If you are noticing that franchisees are mostly instigating the litigation, I would research how the company is doing financially. See how well the franchise brings in money. Franchises that are doing well do not usually get sucked into litigation. Franchisees may also be successful but may want to try something else. If the franchisor is instigating the litigation, this shows that the franchisor turns to its lawyers to fix problems.

Another thing you want to do is talk to the franchisor about it. After doing research get the franchisor’s side of the story. The franchisor should not have a second thought about explaining the litigation. If the franchisor is reluctant to talk about the litigation, I would stop pursuing that franchise.

After hearing the franchisor’s side of the story, you will want to talk to the franchisees of the company. There are always two sides to a story. This is why you should try to get first-person accounts.

Good Luck!

If you are considering buying a franchise, one of the most important step you must take is finding out the actual quarterly or annual earnings of the franchise you’re interested in. This information is really important to get so you will know whether or not the franchise is financially doing well.

In the sixties and seventies there were a lot of problems with franchises giving misleading information to franchisees. Due to this, the government put the Federal Trade Commission in place to regulate the franchise industry and to have the FTC create rules in regards to what information franchisors have to give to prospective franchisees.

The FTC has no restrictions on what information the franchisors want to make available to future franchisees. All the franchise must do is put the information in Item 19 or their UFOC disclosure agreement. The financial information in Item 19 must be clear and accurate as possible. This section may include information about sales, cash flow, or income.

Many franchisors are hesitant to give out their financial information. Their income, annual earnings or cash flow may not look appealing to prospective franchisees. Because of this some franchisors do not give this information out. The FTC has not made any law that the franchisor has to provide their financial information.

If the franchisor does not provide this information, you should consult one of the franchisees of the company. The franchisee can give you insight on how the franchise is doing. Finances are always very touchy to talk about. You want to be careful how you ask your questions because you don’t want to offend anyone.

You’ll want to ask how the franchisor helped the franchisee get the business up and running. Ask what kind of strategies in the beginning to the businesses name out in your location. Ask about the franchisors supply purchasing strategies. After getting some basic questions answered, you’ll want to move on to the big questions. Some of the big questions are: How much did it cost overall? How long did it take to break even? How does the company’s gross income look? Other topics you may want to bring up is net income, cash flow, and whether or not the franchisor has lived up to their agreement.

Make sure to go about the questions respectfully and politely. You want the franchisee to know that you are truly thinking of being apart of the family but want to make sure you’re making the right decision.

Good Luck!