Buying a business franchising is not an especially new way of doing business, but it’s one that’s proven throughout the years to be particularly successful. Whether you’re the franchisor or the franchisee, business franchising has a number of plus points, and can be made into a good investment for everyone concerned, provided a few fundamentals are in place to make it a good investment.

The franchisor benefits from the franchise arrangement by being able to expand his business, often at a more rapid rate than would otherwise be possible. He also draws the financial benefits from the goodwill amounts built-in to the initial franchise investments, and potentially even from a share of the franchisees’ profits. The franchisees benefit from having a tried and tested business model, with a recognized brand or proprietary technology that will allow them to enter into business in a better position that they would have been had they started alone.

It sounds like a good business improvement to opt for business franchising, from both sides, but it’s important to understand what makes a franchise a good investment. First there must be real brand value, or goodwill, which the franchisee can use to boost his business. There’s no point in investing in a franchise that has never been run as a business, or has not been tried and tested to ensure it’s a working formula – otherwise, in the absence of any invention or technology, there’s no reason to invest in buying a franchise over starting your own business.

Franchises are very popular at the moment and more and more people are choosing to buy one as opposed to starting out by setting up their own business.

By purchasing a franchise you are effectively taking advantage of the success of an already established business. As the ‘franchisee’, you are buying a license to use the name, products, services, and management support systems of the “franchiser” company. This license normally covers a particular geographical area and runs for a limited time. The downside to a franchise is that you will never actually legally own the business.

As a franchisee, the way you pay for the franchise may be through an initial fee, ongoing management fees, a share of your turnover, or a combination of these depending on how you have set up the franchise.

A franchise business can take different legal forms – most are sole traders, partnerships or limited companies. Whatever the structure, the franchisee’s freedom to manage the business is limited by the terms of the franchise agreement.

For more information about buying a franchise, please visit this website

Is it worth investing in a Business Franchise?

The simple answer is yes. However, it is important that you follow some careful steps before buying into a Business Franchise.

The good news is that there is information to suggest that the Franchise Business sector is still growing rapidly. During 2007 the Nat West Bank carried out a survey into the UK franchise market which revealed the astonishing financial growth of this sector. The approximate annual turnover of the business franchise sector is in excess of £10.8 billion. What is more interesting to note is that the vast majority of Business franchisees are in profit – a total of 93% to be exact! In 1991 the total number of profitable franchisees was 70% and in 2004 it was 88%. Therefore, this business sector is growing and there is a reason for it.

Why is it growing?

The simple reason is that a Business Franchise is usually tested first before it goes to market. If it works in one area, then there is a very strong chance that it will grow in others. As an example, take a moment to think about popular franchises such as Dominoes or McDonalds. They are literally everywhere, proving the fact that if there is demand in one area of the country, there will be similar demand elsewhere. The reason for this is because generally we are all the same, as people that is and we tend to follow trends. If 100 people like eating Dominoes pizza, then eventually there will be 100,000 that do! It’s simple science but it is worth thinking about when buying a franchise. The only downside to this philosophy is that the more demand there is, the higher the cost of the franchise.

Getting in at the right time.

The most effective way to turn your initial franchise investment into a successful profit is to buy in at the right time. That is, to buy into a franchise in a ‘key’ area and at a time when the franchise is generally unknown to the masses. The benefit of this method is that is a franchise is new and not very well known, the vendor cannot demand a high price for their franchise. The downside to this method is that you, as the franchisee, take the risk that the business as a whole may not grow into a hugely successful business.

Carry out lots of research before you commit.

The first piece of advice, and probably the most important, is not to part with your cash until you are absolutely sure you will see a return on your investment (ROI). Do not, and I repeat, do not part with your cash simply because you are eager to ‘own’ a business. Owning a business may appear to be exciting and a way of impressing your circle of friends, but in reality it is hard work and often difficult to get off the ground. That is why you must carry out plenty of research first before you commit to anything.

Starting up your own new business involves risk. The number of new businesses which do not make it within their first two years is much higher than the ones that’s see some success. It’s your own individual circumstances and personality which can determine if you afford the risk of your business failing depends. The best way to reduce the risk of failing is to consider buying an online franchised business.

Running a an online franchise business isn’t for any Tom, Dick and Harry. Before making this your full time business venture of the future, you better be sure that you are a good fit for this type of business ownership. There are a few major factors to take into consideration when deciding whether an online franchise is for you. Here are a few pieces of advice to help you begin you own online business franchise:

  • Do some browsing all around the web looking for an online business franchise that has something which interests you such as a hobby. Running an online business is just the same as running any other business. It runs best when you and your workers enjoy everything that it entails such as the product or service. There are a number of different business directories online that can provide you an overview of the various national franchising opportunities depending on the industry.
  • Assess your financial situation and make sure you have enough funds to purchase this new online business franchise. Many franchising companies are leery of letting just anybody sign up to become one of their online franchises so they have a minimum financial amount set which potential owners must meet. If you have the ability to, apply for a small business loan to meet the majority of that franchising fee. The rest of your assets should be used as a start up fund for the new business venture.
  • Before you sign any paperwork on closing the deal, ask yourself if there is enough of a demand for your product. Is this something that you can see people purchasing enough of to make a profit? How many other franchises like yourself already exist and will that affect your business? Operating a successful online business is all determined through the high demand niche of an Internet company which meets a wide range of needs.
  • If you don’t have one already, then it is best for you to write up a business plan. This is used to state all of your plans of action and financial goals to the franchising companies, lenders and investors. It outlines how you will selling products and how you think you can help you and the franchisee become a successful player in your niche industry. The plan will contain profit projections as well as monthly operating costs showing long-term commitment to the franchise.
  • As part of your franchise application, spend the time and money to create some different promotional materials and a top notch marketing plan. The franchising companies provide logos, slogans and other materials needed to brand their products so you won’t need to worry about any of that but it isn’t a bad idea to create your own local and regional advertisements to mix with these branding tools.