Are Franchises Guaranteed To Make Money?

Nothing in life is guaranteed except for taxes and death! Although the majority of franchisees are satisfied, successful business people, some do make a loss and go out of business.

So baring that in mind, you should be particularly wary of any company which guarantees profits or certain success.

If you hear a claim about a company that sounds too good to be true, then it probably is too good to be true.

It is your responsibility to investigate all earnings claims made by a franchisor, and it is vitally important that you do so.

Regardless of earnings claims, you must realize that your success can come only through your own hard work. Success or failure is in your hands.

You should ask yourself that if there are already other existing franchises of the same company doing well, then why shouldn’t you. After all, buying into an existing successful and proven business model is what buying a franchise is all about.

Are There Any Drawbacks Of Owning A Franchise?

Well yes there are.

Initially there is the relatively high purchase price. All of the many benefits associated with buying a franchise do not come free.

In addition, you must be able and willing to give up some of your independence in return for the security, training, and marketing power of the franchise trademark.

If you are the type of person who likes to make all the decisions on your own or to chart the course of your business without referring to others, then a franchise may not be right for you.

As a franchise owner, you must comply with the various controls and procedures established by the franchisor. You must be prepared to make that commitment.

What Is The International Franchise Association?

Companies that belong to the IFA must meet certain membership requirements.

They must have a satisfactory financial condition and comply with all applicable franchise laws.

In addition, all members must agree to abide by the Code of Ethics.

IFA members are kept abreast of every change in franchising laws.

IFA provides continuing educational programs for members on how to conduct their businesses. They receive the latest information about topics such as improving relationships with franchisees, use of technology, public relations, marketing, advertising, field operations, networking and things a company with an eye to the future must know and implement to compete in the marketplace.

IFA members are committed professionals prepared to be self regulated and open to scrutiny.

What Are The Current Trends In Franchising?

Among the most important trends in franchising today are:

• the internationalization of franchising

• the emergence of women and minorities in franchising

• the increased use of technology

All of these have profound and positive effects on franchising and make it an even more dynamic method of doing business today.

International Franchising

Franchised businesses continue to grow in all corners of the world.

Domestic franchisors in many countries are increasingly establishing franchises across borders. International franchising has been successful because consumers around the world recognize famous brands as symbols of quality, consistency, service, and value.

If you are considering the purchase of a franchise, do not limit the scope of your search to franchisors just in your home country.

Increasingly, franchisors are seeking franchisees internationally, and a foreign-based franchisor may provide you with the franchised opportunity you are seeking.

They are also often keen to find someone interested in master franchise rights, an opportunity to be the franchisor for the foreign-based concept in your country or a region of your country.

Of course, international franchising will present different challenges. If goods are coming from overseas, you may need to be aware of various duties, tariffs, and transportation requirements.

You also need to consider language and cultural differences.

Minorities and Women in Franchising

Increasing numbers of minorities and women are discovering that franchising can be a good opportunity for everybody.

Franchisors provide managerial training and assistance on an on-going basis and, in some cases, arrange for property leases, provide equipment financing and sale-leaseback programs, and assist franchisees in obtaining financing.

Women are increasingly in leadership positions in franchising whether through establishing new companies, becoming single and or multi-unit franchisees, or having high-level positions at corporate headquarters.

As the population of minorities in the U.S. population continues to rise, minority franchising in cities is expected to rise.

IFA’s Minorities in Franchising Committee and the IFA Educational Foundation’s Diversity Institute provides research, education, and outreach programs to expand the opportunities for minorities in franchising.

IFA’s Women’s Franchise Committee (WFC) is dedicated to inspiring and encouraging women in franchising by creating a network of business professionals dedicated to strengthening the success of women in franchising.

The WFC has created a number of programs and resources in order to achieve this goal, ranging from ‘how to’ guides and conferences to local networking chapters.

Technology and Franchising

There are several trends related to the use of technology in franchising today.

1. Many franchisors use the internet to communicate with their franchise owners and suppliers in order to share critical information, facilitate discussion among the franchise network, post operations manuals and updates, disseminate news about ad campaigns, engage in supply chain management, and gather sales reports automatically and without the need for more labor-intensive data entry.

2. Franchisors use the internet to advertise their network to customers.

3. Some franchisors use the internet to engage in business-to-consumer (B2C) e-commerce, often with the involvement of franchisees.

4. Many prospective franchisees glean information and make contact with franchisors using the internet. Some franchisors now report that they get more sales leads from the internet than from any other source.

5. Some franchisors have started providing disclosures to prospective franchisees via the internet.

6. Franchisors make extensive use of technology in offering their services directly to consumers. e.g. Networks of businesses that offer website design and web hosting.

Technological advances are a fact of our modern life and any savvy business person will find a way of leveraging their benefits to improve their business.

This article was written by Brian K Fitzgibbon CPA.

Brian is an experienced accountant and small business consultant. He runs his own business, lectures extensively on small business topics and has checked out and valued many hundreds of small businesses for buyers.

Brian is also the author of the highly acclaimed and invaluable
"How To Value A Business And Buy It Without Fear"
A do-it-yourself guide for first-time and experienced buyers alike.

To download a FREE Chapter from Brian's book please follow this link: "HowToValueBusiness.com"

May 6th, 2009 | Tags: buy a business, buying a business tips, franchise, franchising | Category: articles | Subscribe to comments | Leave a comment | Trackback URL  |