Right Franchising

Tag Archive: Funding

Are You Seeking The Hottest Franchise?

(c) Can Stock Photo / alexmillosAs a franchise coach, I am often asked, “What is the hottest franchise?”

The answer is one that most people don’t like, “Well, it depends.”  What may be  a good franchise good for your brother Joe may not be good for you.  You may have different requirements, different dreams and different goals than your brother Joe.

So, how do you find the “best” franchise for you?  Most of our clients ask this question:

What is a good franchise that I enjoy, and that will work well in my market and for my life?

When I Googled, what is the hottest franchise, my search returned a lot of companies advertising all sorts of brands.  It was more gloss than substance.  You want to move beyond the gloss and ask these six questions:

  1. How much does it really cost?
  2. Will it work in my market?
  3. Can I still have the lifestyle I want?
  4. How much money will it make and when can I start making it?
  5. What type of support will I get?
  6. How stable is the franchise for long term growth and development?

Where Do You Start

To find a good franchise that works will in your market and for your life, start with yourself.  Write down the pros and cons of your last three jobs.  This will give you an idea of what you like.  Ask friends and family to help you understand your strengths and weaknesses.  You can also use our free business assessment to learn more.

Click here to start our free business assessment.

Funding

Visit with a good financial advisor, banker or 401K rollover specialist.  Learn what your options are for funding your new business.  It is always best to put together a plan of both your personal and business financial goals.  You want to be able to afford the business, as well as pay your personal bills, as the franchise starts to build and grow.

Your Market Area

Use data to understand your market better.  A good resource is www.citydata.com.  Notice the salaries in the area and the distribution of commercial versus residential.  Notice the average age of the residents in your area.

Family

Does your family support your decision to buy a franchise?  Most everyone has bought a house or car.  Buying this kind of business is a much bigger decision even though franchises are highly successful.  Your family needs to be involved and support you.  Ask these three questions.

  1. If we buy a business, will you support me?
  2. What type of support will we give one another to make this new business work?
  3. Who will do what if a family member wants to be actively involved in the business?
  4. And, finally, do you all agree on the overall budget for the business? Do your homework on funding.

Learn to Involve Subject Matter Experts (SME)

Are you an “Unconscious Incompetent?” Do you know what you don’t know? This is where SMEs can be handy.

Your SMEs should be a good franchise coach, accountant, franchise attorney and banker. Do your due diligence on the business. (Investigate the business long before you write a check)

There is a lot to due diligence.  But speaking with the other franchisees (owners) in the franchise system is where you will uncover a wealth of good solid information including true earnings, challenges and rewards of owning this business.

“Other factors to consider when deciding on a franchise: how long locations have been open, net
location
openings in any given year; and growth potential of the concept’s given industry. Finally,
investors should talk to established franchisees in the system.”  The Street

What is the hottest franchise?  It is one that fits you, one you can afford and one in which you have completed your due diligence.

Right Franchising helps our clients with finding the right franchise for them and then we provide all the tools to help them complete a thorough due diligence on the franchise.  We prevent costly mistakes.  And, most importantly, we help our clients make well-informed decisions.

Franchises: How to Buy One…

…And Still Afford Lunch (not just at a Franchise)

Most people drive down the street and see McDonald’s, Burger King and Chik-fil-A.  They believe that is the extent of a franchise.  So, let’s look at some facts.  Below is a good statistic provided by the International Franchise Association that shows the financial cost of a franchise and the percentages of franchises found in each financial segmentation.

Cost of Franchise Businesses graphic

 

Notice that 52% are under $100,000.  This figure would include everything you need to open the franchise, and often includes three months of working capital.  With a 690 or better credit score, you would put down $20,000 or $30,000, and the remainder would be funded with an SBA loan or other funding sources.

Also, notice that only 5.6% are over $500,000.  A McDonald’s franchise costs around $1.8 million for example. Of those 5.6% of franchises, they fall in many categories; restaurants are more likely going to be at the higher-end cost. There are great franchises for $500,000, and great franchises for $75,000 or less. I’ll help you choose the one that fits your needs best.

So, then you may be wondering, “If I invest more money, will I get a better return or a higher profit margin?”  It has been my experience as a certified franchise consultant that there is NO automatic correlation between the cost of the business and the PROFT it can earn.

Surprising? Yes!  But when you want to really evaluate a business, the best approach is to figure the net profit the business can generate.   So, what is net profit?

“Net Profit is the actual profit made on a business transaction, sale, etc., or during a specific period of business activity, after deducting all costs from gross receipts”, as defined by Dictionary.com.   It is easier to say, sales minus expenses.

Right Franchising understands this and matches candidates to the right franchise; one you can afford and one that generates a solid net profit for you and your family.  We do this with real numbers that you can validate with other franchisees (other owners) in the franchise system.  It is easy to do and really helps you make an informed decision.

So, if you’re ready to take the next step of checking out a Franchise, give me a call. I’d love to help you find just the Right Franchise! Franchise.  Call me at 877-307-1458 and let’s get started!.

Looking For New Business Funding?

Funding graphicBut, You Have a Few Funding Questions…

Like:

  • How much money will I need? 
  • How do I go about funding a business? 
  • Is the funding safe?

As a franchise consultant, my clients usually have two fearsFear of failure and fear of funding.  In this article we are going to address funding, and in our next Blog post we will address fear of failure.

How to Fund a Business

Most people have bought a house or a car but a business!  How does one even start to understand where to find the money to fund a franchise?  Here are four interesting facts below and four good ways to fund your franchise.

 It is easier to fund a business than to buy a home. You just need the right sources.

  1. Learn from Gayle at Right Franchising ways to fund a business that are safe, proven and provide peace of mind as you start your business.
  2. We find good sources with low interest or no interest rates for our clients.
  3. Right Franchising will provide funding assistance and analysis. So you make the right decision and avoid costly mistakes.

So, there are better ways than to go to my local bank?  Yes! Because banks have less money to loan, and they have increased their requirements which often makes loans out of reach for most people and some investors.

Types of Funding Plans

  • Rollover of funds – without debt, penalties or interest and the government assumes 40% of the cost of the franchise.
  • SBA Express Loans – offers Small Business Loan Express (UNSECURED) loans with loan limits up to $150,000, which are easier and faster to process.
  • SBA Loans – Loans with 20 to 30% down depending on credit score and debt ratio. These loans are for franchises that are from 150,000 to 1 million plus.
  • No Money Down Loans – these loans require no money down and one can borrow up to $100,000 or more in some cases.

Don’t let the fear of funding stop you from owning a strong performing franchise or business.   There is no charge for the conversation only good solid information to help you learn about funding.  Your desire for a business may be within your reach and you just need information.

Please call Gayle at 877-307-1458 or email me at Gayle@RightFranchising.com to schedule a brief 30 minute call.

Copyright 2015