Get Cashin 2009

There is little doubt that buying a business franchise involves a making a big commitment both financially and in terms of the amount of work that it involves.  For this reason it is important that people thinking about investing in a franchise take their time in considering the options.  If you are investigating a franchise opportunity these are some of the questions you should ask.

What type of franchise is being sold?

Since there are several different types of franchise systems in the UK the first question to ask is what type of franchise is being offered.  Probably the most widely known kind of franchise is the business format franchise.  Business format franchises involve a broad relationship between the franchise and franchisor.  In this type of franchise the franchisee receives assistance with some or all aspects of running the business.  Other types of franchise include manufacturing franchises and basic product franchises.

How many franchisees does the company have?

Before investing in a particular franchise it is useful to know how many franchisees the company currently has.  A large number of franchisees indicate that the company is successful and well established.  However this may not always be a positive factor.  A high number of franchisees may mean that the market has become saturated and that there is a reduced opportunity for profit.  Similarly prime market locations may already be occupied.  Newer franchises that have not yet had time to become established may offer a better long term investment.

How high is the franchise fee?

 Most if not all business franchises will require franchisees to contribute an initial investment fee.  The size of this franchise fee will vary between companies.  If you have a limited budget then the choice of available franchise opportunities will clearly be narrowed down to those you can afford.  Many franchisees will take out a loan to help them with their investment.

How much support and training is provided?

Many franchisors will offer training and support to their franchisees to assist them with running their business.  The actual amount and quality of support offered will vary between franchisors and so it is important that you investigate just what you will be getting for your money.  If you have had little previous experience of managing a business then it is beneficial to choose a franchise that provides a lot of help to its franchisees.