Talk on the Street
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Talk on the Street
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Identifying the strength and stability of one franchise business from another can be tricky. Franchise expert Derek Cafferata shares 3 points to consider when comparing franchises.
You want to be your own boss, have your own business and stretch your entrepreneurial wings. You’ve looked into various ways of starting your own business and have decided that franchising is the best option. You’ve even decided on the type of industry you want to buy into and you have the initial financing sorted. Now you just need to choose which franchise to buy into.
So, how does one choose which franchise is best? Gloria Jean’s or Biggby’s, Papa John’s or Taco Bell, Century 21 or RE/MAX?
According to franchise expert Derek Cafferata, there are three main points to consider when looking at which franchise to buy.
One of the greatest advantages of the franchise business model is that each franchise unit benefits from the brand strength of the franchise as a whole.
“A small business owner, in business for him- or herself, generally has a limited marketing budget, generally one that will have a local or regional reach,” says Derek Cafferata, CEO and President of franchise experts All State Franchise Finders. “With a franchise, every single franchise unit benefits from a large, usually national and sometimes international, marketing strategy that helps to build a strong brand.
When looking at brand strength, consider the company’s online presence, including its social media presence as well as where it sits in the media, current news and customer reviews.
Support and Training
Adequate and ongoing support and training is a key aspect to the success of any franchise unit, especially when you consider that the business support available is what attracts so many entrepreneurs to the franchise business model in the first place.
A top franchise will offer extensive training and support to its new franchisees that include support in areas of marketing, staff training, management, daily operations, financial and legal.
“Every franchise offers varying degrees of support and training to its franchisees,” says Derek. “A franchise that is willing to support in all areas of the business is what you should be looking for.”
One of the best ways to find out how much support and training is offered, according to Derek, is to speak to current and former franchisees. Ask open questions about how they felt and what they experienced as a new franchisee. Most franchisees are willing to offer real advice and first-hand experience to others.
Costs and Fees
The initial franchise fee and the ongoing royalty fees are the common costs associated with buying a franchise. However, there are many more fees and costs that can be associated with buying into a franchise.
Apart from the initial franchise fee, there may be costs to rent, fit-out and stock your location. There may be insurances, operating licence costs and opening costs you have to pay. Advertising costs will be necessary, and these are likely to involve paying towards the advertising for the franchise as a whole, not only for your specific location. Royalty payments may be charged even if you are not making a profit or if you want to break your franchise agreement early.
Having a clear understanding of all upfront and ongoing costs and fees involved is absolutely necessary. But it should never be about buying into the franchise with the least costs.
“Buying a franchise can cost anywhere from tens of thousands to hundreds of thousands of dollars”, says Derek Cafferata. “While you need to take into consideration your budget and financial position, choosing one franchise over another shouldn’t solely come down to who offers the lowest upfront costs or least expensive royalty fees.”
The best piece of advice for potential franchisees according to Derek Cafferata? Utilize the knowledge and experience of a franchise expert.
Seek Expert Advice
Derek Cafferata and his team at All State Franchise Finders bring more than 30 years of experience with them in the franchise industry, both within the United States and internationally.
If you are considering buying a franchise, then be sure to contact the experts at All State Franchise Finders on 1-800-544-2161 or visit demo.allstateff.com today. All State Franchise Finders – your Franchise Experts!