What Franchise Makes the Most Money?

You're asking yourself, "What Franchise Makes the Most Money?" Good question.

A person can't really point to a particular franchise and say, "There's the money maker," because the fact is any franchise can be profitable. So, instead of trying to determine which franchise will make you richer faster; look for things that must be present in order for any franchise to be profitable.

• One of the key indicators to a profitable franchise is how well it is managed. As with any business, franchise or otherwise, if it is struggling or otherwise unproductive, often the blame, or at least part of it, is going to rest with management. 

• The home real estate industry likes to say that the key to a successful home sale is almost always "location, location, location". In the franchise industry, those words could be "market, market, market". There have been instances of franchises succeeding in markets that previously did not seem as though they would support them. However, these are usually the exceptions to the rule: most of the time the success of a franchise will depend on whether or not the services it provides are needed or wanted.

• If you want to try to get a clear picture of a franchise's profitability, ask to see the Franchise Disclosure Document (FDD). This is a publication that franchisors—those who offer franchises for sale - are obligated to provide to prospective buyers. If a franchisor is dragging their heels to provide the document, or if there is evidence that certain sections of the document may not be a true reflection of the franchise's profitability, this can be a sign that the franchise is not doing well.

• Consider whether or not the franchise has good investment possibilities. If lenders or other financial backers seem reluctant to provide all or part of the money needed to start a franchise branch, this may indicate that the master franchise itself, or at least a good portion of it, is experiencing profitability difficulties. Keep in mind, however, that a number of factors can affect profitability at any given time, so a little more research may be in order to try to ascertain the reason for the investors' reluctance.

• One of the best indications of a successful franchise is sound strategy development. The franchise that combines tactics that are known to be successful with others intended to further growth are often the ones with the highest profitability.

The more of the above key indicators, as well as others, that are present, the more likely it is that a franchise will be successful. By looking for these and other signs of good business practices, you can determine which franchises are indeed the most profitable. To aid you in evaluation these indicators, one of many franchise consultants can assist you.

Which Franchise Should I Buy?

The question of which franchise should you buy is definitely a personal one. Only you know what you do and don't like to do, what you are good at, and what you will honestly admit that you absolutely stink at.


However, by answering the questions below, and of course, any others you may think of, you can get a picture of exactly which franchise you should buy and which ones you shouldn't even consider.


What do you like to do? What do you think you would like to do?

When you patronize an establishment, do you find yourself thinking, "If this was my business, I'd...(fill in the blanks)."If so, you might want to conduct your own research into franchises dealing with that particular business, and what exactly is involved in owning one.


Remember, however, that when you into any business as a patron or customer, you are not seeing very much of the behind-the-scenes operation. There is inventory control, State and Municipal rules, regulations, and guidelines to be followed, and other things that come with running a business.


How "hands-on" do you want to be?

Do you want to be the one behind the counter, or do you want someone else greeting and assisting customers? Some franchises require that the owner be just as involved as other employees, while others allow the owner more flexibility in delegating tasks and responsibilities.


Why do you want to buy a franchise?

Has it always been your dream to work in a particular field, and you find yourself in a position, financial and otherwise, to fulfill that dream? If so, buying a franchise in the area where you have always wanted to work can help you realize that dream.


What are some of the advantages to starting your own business?

When you are a franchise business owner, you are literally your own boss, at least in your particular branch. You may have to answer to an area or district manager, but you still own your little piece of the enterprise, and it's yours to run as you please, as long as you follow the master franchise rules and regulations.


If the franchise is a success, you never have to worry about being out of work again. As long as your branch is in business, you have a job to go to every day, which will get you out of the house and into the business world.


Consider leaning upon the expert advice of a franchise consultant, many have found the answer to the "Which Franchise Should I Buy?" question by working with one of many franchise consultants.

What To Expect from the Initial Franchise Presentation

One of the most popular television shows recently has been "Who Wants to Be a Millionaire?" When it comes to deciding upon your "Final Answer" about your future and your franchise selection you need to study and do your home work. That is, you need to complete your due diligence, a thorough investigative process, as you prepare to take to the stage as a contestant during the initial franchise presentation.

The day that you meet with the prospective franchisor company face-to-face at the company headquarters is often referred to as Franchise Discovery Day. At that point you have the opportunity to learn detailed facts and figures about the firm’s business model, and you have the chance to be the one asking the questions, and by all means, be well-prepared to do so. Ideally, you will have already consulted with a few existing and even former franchise owners with regards to their experiences.

This critical meeting will center around the Franchise Disclosure Document (FDD) which is required by the Federal Trade Commission. The FDD (formerly called the UFOC - Uniform Franchise Offering Circular) is a legal, binding agreement that covers the following topics and must be reviewed at least 14 days before a franchisee ever signs the contract:

• History of the franchise
• Franchise fees and royalty fees
• Information about franchisor executives, directors
• Company litigation history
• Terms of the franchise agreement
• Estimates of initial costs, inventory, insurance
• Renewal options
• Territorial boundaries
• Products and services
• Training program
• Franchisee obligations

The franchisor also must provide information regarding the responsibilities it has to the franchisee:

• Training program
• Territories and locations
• Advertising and marketing support
• Management and operational planning support
• Trademarks, patent and copyright information
• Audited financial statements
• Existing franchise statistical information
• Vendor and product restrictions
• Renewal, termination, dispute terms

Caution: before you sign any Franchise Disclosure Document, it is imperative that you seek legal advice as well as counsel from your financial advisor. Remember the Boy Scout motto: "Be Prepared."

 

Finally, similar to the "Who Wants to Be a Millionaire" program, know that you have a "lifeline" - the opportunity to collaborate with one of FranFinders franchise consultants whose professional experience can be invaluable.

 

 

 

Franchise Business Profitability

Many things can determine franchise business profitability, but there are specific key performance indicators (KPIs) that can help give a more accurate picture of how well your franchise is doing in terms of showing a profit.

• Are your living costs being met? In other words, do you have enough money coming in from your franchise to keep a roof over your and your family's head, provide for the children's education, cover minor emergencies, and buy groceries, just to name a few. At the very least, this is how much money should be coming in over and above operating expenses.

• If you borrowed money for the franchise fee, are the payoff terms in line with the length of the franchise agreement? Or are you going to be paying for a 5-year franchise agreement for the next 20 years? If you are, then your debt to asset ratio is too high.

• Are you using franchise profit for personal expenses, in order to receive a tax break, or for any other reason? When you do this, the bottom line is that your business profits are not as high as they can or should be.

• Are you paying yourself enough, or are you paying yourself too much? Both situations create false profit figures.

• Are your cost and other margins accurate, or are they too wide or narrow? As with salaries, too much or too little will not give an accurate picture of franchise profitability.

• How are your expenses? Do you need to get them under control? Too many expenses can make a huge dent in profits. Look for ways to control cost without sacrificing customer service or satisfaction. And, whatever you do, don't try to cut corners by failing to adhere to guidelines and regulations.

• Do you have to be told that more sales mean more profits? Probably not. Look for ways to increase your sales at the same time you are figuring out how to cut expenses.

• Ready for a review? It's a very short, simple one. Keep your expenses low, make sure your margins are as accurate as possible, and increase your sales. By doing this, you will be able to get a clearer, more accurate picture of what your franchise profitability truly is.

Only a few people besides yourself need to know your franchise profitability, because it's really no one else's business except those who are directly involved in the franchise. However, this seeming lack of accountability is what makes it easy for you to "play around" with your figures. Don't do it; instead, hold yourself to an honest reckoning.

By contacting one of FranFinders expert franchise consultants, you can be referred to a competent franchise accountant that can review any franchise business profitability numbers.