subject: Franchise Opportunities For Sale - 5 Elements Of A Franchise You Need To Be Concerned About [print this page] Franchise Opportunities For Sale - 5 Elements Of A Franchise You Need To Be Concerned About
Franchise opportunities for sale are being looked at more and more today because of the current global economic conditions. The national unemployment rate is very high and that number doesn't even include the people who have stopped looking for jobs. However, people still have to pay their bills and they have to put food on the table. Because of all these factors there is a huge movement towards entrepreneurship and business ownership and franchise opportunities our major piece of that.
When looking at franchise opportunities for sale, it's easy to get excited and to jump right in with the first opportunity that comes your way. That's a big mistake and that's what I'm going to teach you not to do. In this article I'm going to identify five elements other franchise opportunity that you need to be concerned about.
1. The industry - One common mistake new franchise owners make is choosing a franchise in an industry that is either stagnant or mature. To really give yourself the best chance of succeeding, you want to avoid that at all costs. You want to choose an industry that has growth or is poised to growth. For instance, Internet franchises and home-based franchises are very popular today because of their exponential growth, because people want to work from home and because almost everything is going online today. Choosing the right industry for your franchise will make a world of difference.
2. Royalty fees - The range of royalty fees can being where from 2% to 10% but the average ranges from 3% to 6%. These numbers are based on gross revenues and not net profits, so it's important to have a good financial understanding of the numbers to make sure you can actually succeed with as little as earning $.90 on the dollar. Some franchise companies require minimum royalty fee payments no matter what happens in the business. If the business is bad for one month, you still have to pay. On the other hand if the business is really good, you can actually save money by only having to pay a certain amount.
3. Territory restrictions - This one factor alone can literally make or break your franchise opportunity. When looking at franchise opportunities for sale, it's important to understand everything in terms of the territory you will be getting. What you might not be aware of is that you can negotiate your territory with the franchise company. If the territory is good, you might want to negotiate for the longest term possible. On the other hand, if the territory is not to your liking, you might want to negotiate for the shortest term possible that you could renegotiate sooner.
4. Profit margins - You really have to do your due diligence on this one because you have to know whether or not you can actually make money with the profit margins that the potential franchise will have. Every franchise has initial cost entry and ongoing costs. You must figure out exactly what you can expect for total sales and if the profit margin will be great enough to actually pay off the debt, pay for all the costs and give you a return. Some franchise opportunities are volume based businesses that work on pennies.
5. Leadership - This might be something you've never thought about before but it's always wise to get to know the leadership of the potential franchise. The better you are at people skills, the better you will be at identifying if the leadership truly cares about the success of their franchisees or if they are just interested in fattening their own wallets. You also want to look at the culture of the franchise and see if the leadership is truly committed and the culture they talk about.
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