As you continue on your journey in purchasing a franchise, there are a number of factors you will need to know. Of the many, one that rises to the top is understanding the demand for your targeted franchises product or service. Knowing this one element, will help you avoid common pitfalls
From the jump, you should be able to assess the level of demand for the franchisor’s product or service within your specific and general area of operation. The demand should be adequate, that is, the number of people willing and able to buy must be there in sufficient quantities. Sound obvious? Most beginning business seekers fail to understand this basic principle.
In addition to sensing the level of demand, you should also consider its nature. Is it seasonal, cyclical or stable? Businesses with seasonal demand will lead to forecasting problems and possibly cash flow issues, especially during the off-peak season. Therefore, if you require a dependable forecast, then seek a franchise with a stable demand.
Finally you should consider whether the demand for the franchisor’s product is short-term (i.e. a fad) or whether it is sustainable over the long term. Long term demand is preferable since it assures the business of continuity. There have been far too many stories in the news about the latest “fad” franchises closing it’s doors. Be wise, and choose a franchise with long term demand.
Understanding the demand for a product or service is crucial. Keeping this fact in mind while seeking a franchise will help mitigate your risks, and eventually add to your business success.
To assist you in your search for a business, consider using the resources of one of FranFinders franchise consultants, they provide a no fee, no obligation service to assist you in finding a franchise.
Friday, December 25, 2009
Friday, December 18, 2009
Negotiating Franchise Relationships
Entering into a franchise agreement binds your relationship with the franchisor. It’s important to ensure the agreement addresses your requirements without jeopardizing future relationships with the franchisor. While it seems, in business, you would want the best position or outcome in any deal. In the realm of Franchises, that is not the case. Quite often its the opposite.
Positive relationships are the strength of any franchise system. When you are building a working relationship with a franchisor, its important to know the boundaries of negotiations. Staying within the lines will help build a strong relationship that will benefit you both for years.
One key area to avoid while negotiating the franchise agreement is offering to pay a lower royalty. While this seems to be the obvious area to “negotiate,” it is actually the least likely to succeed. The simple reason is that the royalty is what sets the standard in the franchise system. All owners in the system have to adhere to standards. It is the standard that creates the strength of franchising. You wouldn’t want to find out at a meeting of franchisees that you are paying double the royalties of someone else because you didn’t do a good job of negotiating. That would not play out well with franchisee harmony. To keep the peace, and the strength, most franchisors are less willing to change the royalty payment.
But don’t give up hope, there may be some areas of flexibility in the franchise agreement. These negotiable points are generally areas that would not be considered disruptive to the franchise system. They can include:
1. Delayed royalty payments. Requesting a royalty payment start date beyond the original opening date. This allows you to capture sales and build your cash position before expensing out royalties.
2. Flexible terms for franchise fee. Negotiating a deferred payment for the franchise fee will help lower cash needed for start-up. Franchisors that stand behind their systems by allowing new franchisees to make partial payments for franchise fee and installments once revenues begin.
3. Training and support. Requesting training for additional or extending the training period. Franchisors need well-trained people to allow their system to succeed. By providing additional support is a benefit to all.
Remember you are building a long-term relationship that needs to be formed on a foundation of trust and respect. Negotiate wisely and understand the other side of the deal.
As always, seek the assistance of a qualified franchise attorney in all matters concerning agreements and contracts. Also, franchise consultants can offer you direction during your search process.
Positive relationships are the strength of any franchise system. When you are building a working relationship with a franchisor, its important to know the boundaries of negotiations. Staying within the lines will help build a strong relationship that will benefit you both for years.
One key area to avoid while negotiating the franchise agreement is offering to pay a lower royalty. While this seems to be the obvious area to “negotiate,” it is actually the least likely to succeed. The simple reason is that the royalty is what sets the standard in the franchise system. All owners in the system have to adhere to standards. It is the standard that creates the strength of franchising. You wouldn’t want to find out at a meeting of franchisees that you are paying double the royalties of someone else because you didn’t do a good job of negotiating. That would not play out well with franchisee harmony. To keep the peace, and the strength, most franchisors are less willing to change the royalty payment.
But don’t give up hope, there may be some areas of flexibility in the franchise agreement. These negotiable points are generally areas that would not be considered disruptive to the franchise system. They can include:
1. Delayed royalty payments. Requesting a royalty payment start date beyond the original opening date. This allows you to capture sales and build your cash position before expensing out royalties.
2. Flexible terms for franchise fee. Negotiating a deferred payment for the franchise fee will help lower cash needed for start-up. Franchisors that stand behind their systems by allowing new franchisees to make partial payments for franchise fee and installments once revenues begin.
3. Training and support. Requesting training for additional or extending the training period. Franchisors need well-trained people to allow their system to succeed. By providing additional support is a benefit to all.
Remember you are building a long-term relationship that needs to be formed on a foundation of trust and respect. Negotiate wisely and understand the other side of the deal.
As always, seek the assistance of a qualified franchise attorney in all matters concerning agreements and contracts. Also, franchise consultants can offer you direction during your search process.
Thursday, December 10, 2009
Overviewing the VetFran Program
VetFran is a program that offers financial incentives to honorably discharged U.S. veterans. The official name is, Veterans Transition Franchise Initiative.
As a voluntary effort of the International Franchise Association (IFA) and its member companies, the VetFran program provides direction and assistance to veterans. Helping those who served pursue their goals of franchise business ownership.
Well over 250 member companies participate in the VetFran program. With this large sampling of companies, nearly every market segment is covered.
According a recent report by the U.S. Department of Veterans Affairs, there have been over 1000 veterans served through the program. With the increasing number of veterans rotating back to civilian life, the trend will only continue.
As mentioned above, the incentive is usually a discount in the initial franchise fees, but that is not mandated. Each participating company has its own incentive program. It would be wise to contact each company and determine the specific plan details.
While VetFran can be a great assistance to you with discounting initial fees, it does not mean that a VetFran participating company is the right choice for you. A review of your business goals as well as a thorough franchise due diligence search will ensure you are making the right business choice.
As a voluntary effort of the International Franchise Association (IFA) and its member companies, the VetFran program provides direction and assistance to veterans. Helping those who served pursue their goals of franchise business ownership.
Well over 250 member companies participate in the VetFran program. With this large sampling of companies, nearly every market segment is covered.
According a recent report by the U.S. Department of Veterans Affairs, there have been over 1000 veterans served through the program. With the increasing number of veterans rotating back to civilian life, the trend will only continue.
As mentioned above, the incentive is usually a discount in the initial franchise fees, but that is not mandated. Each participating company has its own incentive program. It would be wise to contact each company and determine the specific plan details.
While VetFran can be a great assistance to you with discounting initial fees, it does not mean that a VetFran participating company is the right choice for you. A review of your business goals as well as a thorough franchise due diligence search will ensure you are making the right business choice.
Thursday, December 3, 2009
Franchise Consultants - Your FREE Expert Guide
There are only four ways to go into business. You can start a business from scratch. You can buy and existing business. You can become a consultant. You can buy a franchise business. The last, buying a franchise, is the option which allows you to buy a pre-established operating system that reduces the risk.
What if I could tell you there is an expert available, that will help you identify your business objectives, guide you through the selection process, provide valuable insights and provide decision-making data, all at no cost to you, FREE.
There is such an expert, they are called, "franchise consultants."
more...
What if I could tell you there is an expert available, that will help you identify your business objectives, guide you through the selection process, provide valuable insights and provide decision-making data, all at no cost to you, FREE.
There is such an expert, they are called, "franchise consultants."
more...
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