From previous posts you may get the impression I am against franchising – I’m not.
Buying a franchise can be a great stepping stone from being an employee to becoming an independent business owner. The upsides of buying a franchise (provided it is a good franchise) should be;
There are other positives too, but you need to do your homework BEFORE committing to the purchase.
Whenever I am asked for advice on buying a franchise business I always say “Find out how you are going to get out of it.”
Why would I say that? Because I see so many people ‘trapped’ in a franchise which is very difficult to sell and unable to be sold at a price that will recover the initial costs of the franchise. As a business broker I get approached by many franchisees who want out and want to sell and when I appraise the business they are horrified at how little it is really worth. A situation often made worse by franchisors who have totally unrealistic ideas on what their franchises are worth when being sold on.
There I go again – being negative!
Seriously, the original concept of a franchise was that it was simply a license to operate a business for a predetermined period of time.
You don’t actually own a business. You have to make your money while operating the business – not when you sell it. As an independent business owner, you can do both. Make good money while operating the business AND when you sell it.
Remember, if buying a franchise – virgin or pre-owned – find out how you can get out of it and talk to people who have been there and done that. There are good and bad franchises just as there are good and bad business in any industry.
That’s it for this post – let me have your comments, questions etc.
P.S. I was a franchisee for 9 1/2 years and sold at a good price! It can be done.