Franchisee = employer?

An entrepreneur is not just someone who has turned a new idea into a business. An employer may also refer to a franchise, "an individual who purchases the rights to use the brand name of a company and business model for doing business" ( target = "_blank" href = "http://franchises.about.com/od/franchiseglossary/g/franchisee.htm"> http://franchises.about.com/od/franchiseglossary/g/franchisee.htm). While a franchise can require a little more capital to start a business from scratch, the rate of return is generally higher and occurs much faster.

There are several reasons for buying a franchise:

1. 1 in 12 retail stores is a franchise.
2. The cumbersome process of creating a business plan marketing plan and financial plan has already been done by experts in the industry.
3. The purchase is all inclusive, infrastructure, customers, suppliers, employees, equipment and systems as well.
4. You can get a good insight and advice from previous owners.
5. Lenders are more likely to finance a company with a proven track record.
6. Profitability is not in question, as it would initially.

There are drawbacks to becoming a franchisee of others:

1. Extremely high launch costs.
2. Most franchisees have to make royalty payments to the franchisor each month based on a percentage of sales.
3. Many franchisees are obliged to make regular contributions to the franchisor's advertising fund.
4. Most franchisors impose price, appearance, and design standards, limiting control over how the franchise.
5. The franchisor has the right to terminate your franchise agreement if the standard operating procedure is violated in any way.

Cost

The two costs are the most surprising for the franchisee are the Franchise Fee and payment of royalties. The Franchise Fee is time consuming and often non-refundable registration home. This is probably the highest of any charges paid and can range from $ 500.00 to over $ 1 million. The second major cost, payment of royalties, is a flat fee is a percentage of their gross monthly sales. Most franchises have known this minimum monthly fee that can hurt profitability during slow seasons.

How select the type of license to buy?

1. Know your financial capacity. Know the franchise capital requirements.
2. What do you like? Correspond to the category of franchise with what you like.
3. Speak with a franchise representative. They are the first point of contact for all research and can answer any question from a prospective franchisee will.

Once you have all questions answered and reduced the franchise (s) you are interested, you must complete a formal license application, including credit and background check. Once they are eliminated advance, by law the franchisor is required to send an information document Franchise (FDD). The FDD will include information on the franchise that will assist in their decision making process, such as openings in the history of the franchise and its key management, financial statements, litigation, franchising / end / terminations, franchisee contacts, franchise agreement, requirements, and more. Source: target = "_blank"> www.franchise.com

Here are some known franchises available for purchase entrepreneurs who have made Top 10 list for 2009:

Top U.S. Franchise Entrepreneur's Franchise 500

1. Metro
2. McDonald's
3. Liberty Tax Service

4. Sonic Drive-In Restaurants
5. InterContinental Hotels Group
6. Ace Hardware Corp.
7. Pizza Hut
8. UPS Store, The / Mail Boxes Etc.
9. Circle K
10. Papa John's Int'l. Inc.

Top Franchise Opportunities can be run from home

1. Jani-King
2. Jan-Pro Franchising Int'l. Inc.
3. Servpro
4. ServiceMaster Clean
5. Snap-on Tools
6. Stratus Building Solutions
7. Matco Tools
8. Jazzercise Inc.
9. Vanguard Cleaning Systems
10. Bonus Building Care

Top franchises can start for less than $ 50,000

1. Instant Revenue Service
2. Jani-King
3. Jan-Pro Franchising Int'l. Inc.
4. Kumon Math & Reading Centers
5. ServiceMaster Clean
6. Merle Norman Cosmetics
7. Stratus Building Solutions
8. Jazzercise Inc.
9. Vanguard Cleaning Systems
10. RE / MAX Int'l. Inc.

Franchise faster growth of the Franchise 500

1. Jan-Pro Franchising Int'l. Inc.
2. Metro
3. Instant Tax Service
4. Stratus Building Solutions
5. Snap Fitness Inc.
6. Dunkin 'Donuts
7. Jazzercise Inc.
8. Bonus Building Care
9. Anytime Fitness
10. Vanguard Cleaning Systems

If you are concerned about the franchise fee, royalty fee and initial investment, here are some examples of well-known franchises:

Metro:

Total investment: $ 78.6K-238.3K

Franchise Fee: $ 15K

Royalty payments current: 8%

McDonald's:

Total investment: $ 950.2K-1.8M

Franchise Fee: $ 45K

Course royalty rate: 12.5% +

Liberty Tax:

Total investment: $ 56.8K-69.9K

Fee Franchise: $ 40K

Course royalty rate: Varies

If you can imagine buying the rights to name the company of an acquaintance, gaining access to training experts, experiencing a proven revenue stream and strong brand recognition, then the decision comes down to three simple questions; Do the capital? Do you want access to a proven business model? Are you willing to relinquish significant control in the way of doing business? If you answered yes at three, it's time to seriously consider becoming a franchisee.

About the Author:

Dawn Moiré Williams is president of The M.I.L.E., Management Institute of Learning Excellence, adjunct professor at Virginia College, a freelance writer, and senior auditor for a large hospital management company. She received a BS in management from Hampton University and a MBA from MTSU. A resident of Nashville and native of Los Angeles, she is a wife and mother of two boys. Contact her with questions regarding management training, career counseling or article information at dawn@milesofsuccess.com

Article Source: ArticlesBase.com – Should I buy a franchise?

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