Are you in love with the idea of owning a franchise?
Countless people have made the decision to buy and are glad they did. Franchises can quickly provide you with a steady income without many of the challenges that are intrinsic in other business models.
However, before you decide to start putting money into this dream, there are three very important things you must consider before buying a franchise that will make all the difference.
The 3 Most Important Things to Consider Before Buying a Franchise
Although this list will only take a few minutes to read through, give each point plenty of thought so you set yourself – and your franchise – up for success.
1. How the Franchising World Works
Owning a franchise isn’t like owning your own business or even running one for someone else. Before you step into this unique world, learn about it with the following essential – and free – resources:
- The FTC’s Guide to Buying a Franchise
- The IFA’s Franchising 101
- The AAFD’s Road Map to Selecting a Franchise
Most importantly, try to talk with people who are already franchise owners. If you can find any in your area, they can provide extremely helpful insights.
2. The Time Commitment a Franchise Demands
Many people are attracted to the idea of becoming a franchise owner because it seems so much of the work is already done. Your initial investment buys you brand recognition, a proven list of services, and plenty of support.
What it won’t buy is spare time.
Opening a franchise can take between 2 and 12 months and will involve a lot of hard work. Make sure you have a schedule that can accommodate this before you start taking steps to become an owner.
3. How You’ll Finance Your Franchise
One of the most important things to consider before buying a franchise is how you’re going to pay for it. Most entrepreneurs don’t have the capital on hand to cover the initial costs of a franchise. Many of those who do wouldn’t want to unnecessarily invest all of it at once.
Instead, they favor SBA loans.
Keep in mind that franchises come with a number of costs. These generally include:
- The initial franchise fee: $20,000 to $50,000
- Franchise attorney fees: $1,500 to $5,000
- Inventory: At least $20,000 (can be several times that)
There are also a number of other costs that depend on your unique franchise. These are harder to estimate but include:
- Working capital
- Build-out costs
- Travel expenses during the training period
While that doesn’t mean a franchise isn’t a good investment, it does mean you should take plenty of time considering how you’ll finance it.
The SBA Express loan is the absolute best loan for a new or existing business to borrow working capital. This includes franchises. Owners can secure as much as $150,000 without using any personal collateral. If you’d like to speak with an experienced financial professional to learn more about how an SBA express loan can help you buy a franchise, contact us today.