There's a misconception with startup business owners that buying into a franchise isn't the same as having a truly independent company, and in some senses they're right. A franchise comes with the stability and notoriety of an established, successful brand, as well as guidance from a network of other operators who've all walked the same path. This doesn't guarantee that your franchise location will be successful, but on top of all that good advice, there are other tips that will help you weather the storm.
Market saturation
Sometimes a franchise will sell an existing location, but other times it's up to the franchise requestor to get everything together, including business banking and a proposal package, including a store site. For bigger brands like Subway and McDonalds which both enjoy thousands of storefronts in the U.S. it's important to look not only at areas without an existing shop, but also to judge how far apart stores are. A technique employed by Subway consists of mapping "white space," according to Forbes, or distance between stores that may exceed what a customer is willing to travel for a product.
Total overhead cost and financing
Don't let expenses get away from you, and don't be fooled into thinking that a franchise is cheaper just because the goods and equipment necessary are all listed out and readily available. John Bornoty, the owner of a salad chain restaurant in Michigan, told The Detroit News that creativity and commercial loans help get the process going, but it's not without a hefty price tag.
"We try to keep our franchise system inexpensive," he explained in the interview, but did divulge that startup costs are usually around $300,000 per store.
A lot of business owners will turn to the internet for financial investment advice but there are also plenty of tools on the web to assist in getting startup and franchise financing. Intuit can help you find a number of good lenders, while Multifunding shows how devoted to small businesses or how reliable a financial institution has been, as ranked by previous performance.
"Financing is the No. 1 problem," Bornoty told The Detroit News.