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Smart Franchise Tips For Entrepreneurs


Investments can be a great way to start yourself a business. One type of investment option is for a business is a franchise. These type of businesses can be hard to open without assistance. You must have market knowledge, but understand how to actually operate and finance your company. Running your books, hiring and managing employees, and finding customers isn’t easy to do though.

The franchise company that you decide to go with will give you a valued blueprint for success. They have incentive for you to succeed – the better your franchise performs, the more money they make, and the more likely they are to expand their business into new markets. You won’t have to worry about building up a name or figure out which store layout to go with, it has been decided for you.

If you decide that a franchise is something that you want to do, then you should heed these tips that have been made available to you.

5 Tips For Smart Franchise Investing

  1. Knowledge of net worth and liquid capital – financial situation must be in order before you get into franchising. Some franchise operations will not talk with you if your net worth is less than $1 million, so research the company’s franchise fees and agreements before you begin the process of starting a franchise business.
  2. Be wary of extraordinarily high – and low – franchise fees – name brand companies do normally come with a high franchise fee which is to be expected. But if you see a relatively new company asking for very high franchise fees, mentally ask yourself why they are asking such a high dollar and ask as many questions as possible.
  3. Interview company and ask to speak to successful and failed franchiser owners – You need to interview, tour their headquarters, and talk to both successful and failed franchise owners. The company should let you speak with successful owners because that is going to drive you to invest in their brand. Now, if they stiffen up when you ask to speak to failed franchise owners, be wary.
  4. Read everything they send – read over all the documentation that is sent to you several times. Know exactly what you are getting into before signing on the dotted line. Some companies require the owner to also be the operator.
  5. How large of cut does the company get – require not only an up front franchise fee, but an ongoing marketing and support charge that is taken off the top of any revenue generated. This fee can be as low as 1% and as high as over 10%. You may need to run operations for several years before you break even, so be financially prepared for that scenario to happen.
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Published by Sarah

Hello! I'm a self-employed entrepreneur. I enjoy affiliate marketing and photography in my spare time. I am currently in college for communications in social media and working towards my undergraduate degree in graphic design.

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