How to Buy a Franchise Business


If you’re thinking about buying a business and becoming your own boss, you may have a couple of options to consider. Perhaps you’ve always wanted to start your own business or buy a franchise. If you have recently given up your job in order to take the next step in your career, then considering franchise opportunities or buying a franchise business could well be the perfect option for you.

If you have an entrepreneurial spirit and a drive to get into business, this post will look at the steps involved in buying a franchise business.

Business Finance

First of all, you need to establish which sector you are looking to go into. There are many franchises in a range of different industries, so it’s best to define a specific area first. Narrowing your search to a specific franchise industry will give you an opportunity to validate most of the franchises that for the most part will require similar skill sets and passions.

Once you have a clear indication of the franchise industry you want to pursue, whether a coffee franchise or a fitness franchise or a retail franchise, you need to determine whether or not the particular franchise fits your financial budget. One of the biggest reasons for business failure is shortage of capital. So, whether buying a business or buying a franchise, you must be certain you have the required initial investment and more importantly, 6 months of working capital.

Now that you have a pretty good idea of the financial requirements of your franchise opportunity, you need to do a financial audit of your personal resources. How do you intend to fund your franchise business? What is your comfort level or what is your risk tolerance toward this investment?  Do you intend to get a home equity loan or a small business loan?  Do you have enough savings to support you and your family while the business gets to cash flow positive?

Even if you have the funds to move forward, you need to do your homework. Researching the viability of a particular franchise business in your community is paramount to your success. You’ll need to ask all the right questions when assessing the value of a franchise. Current franchisees within the franchise system will be your best source of information. Questions like:  How long did it take you to break even? How much working capital did it require prior to breaking even? How many employees do you require?  Did you get the proper training to start your franchise?  Are you getting the support you were promised?  Do you have a product or a service that is in demand in your marketplace? Again, actual franchisees will give you real answers to questions that will help you make an informed decision.

Obviously it helps to have experience in your chosen industry; combining experience with the perfect business opportunity can have massive potential. So the next step after reviewing your finances and committing to the idea is to buy into the franchise, either directly, or through an online company who can assist you with the process. 

 

About ABF2012

This post was created on behalf of America's Best Franchises, a leading expert in franchises, matching prospective entrepreneurs with the perfect franchise or business opportunity.

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