Selling Your Franchise or Business By Vasilis Georgiou One of the least considered aspects of owning a franchise or business is preparing it for sale when the time comes. The reasons for selling your enterprise can vary a great deal. It could be because of a new venture, or change in direction, health, divorce, retirement or simply wanting to capitalize on the many years of hard work you spent building an asset with exit value. Selling an enterprise must be part of the overall strategy, from the very beginning, essentially, starting the business with the end in mind.
A franchise is a joint venture between a franchiser and a franchisee. The franchiser is the original or existing business which sells the right to use its name and idea. Franchises are a very popular method for people to start a business, especially for those who wish to operate in a highly competitive industry like the fast-food industry.
One of the biggest advantages of purchasing a franchise is that you have access to an established company's brand name ; meaning that you do not need to spend further resources to get your name and product out to customers. The concept of the franchise dates back to the midth century, the most famous example of which is Isaac Singer.
Singer, who invented the sewing machine, created franchises to successfully distribute his trademarked sewing machines to larger areas.
In the s, Howard Johnson Restaurants skyrocketed in popularity, paving the way for restaurant chains and the subsequent franchises that would define the unprecedented rise of the American fast-food industry.
To this day, franchises account for a large percentage of U. Typically, a franchise contract agreement includes three categories of payment that must be made to the franchiser by the franchisee.
First, the franchisee must purchase the controlled rights, or trademarkfrom the franchiser business in the form of an upfront fee. Second, the franchiser often receives payment for training, equipment, or business advisory services from the franchisee.
It is important to note that a franchise contract is temporary, akin to a lease or rental of a business, and does not signify business ownership by the franchisee. Depending on the franchise contract, franchise agreements typically last from five to 30 years, with serious penalties or consequences if a franchisee violates or prematurely terminates the contract.
The Franchise Rule is a legal disclosure given to a prospective purchaser of a franchise from the franchiser that outlines all the relevant information in order to fully inform the prospective purchaser of any risks, benefits, or limits of such an investment.
Such information specifically stipulates full disclosure of fees and expenses, any litigation history, a list of suppliers or approved business vendors, even estimated financial performance expectations, and more. This law has gone through various iterations, and has previously been known as the Uniform Franchise Offering Circular UFOCbefore it was renamed in as the current Franchise Disclosure Document.
Depending on the franchise, the franchisor company may offer support in training and financial planning, or even with approved suppliers. Whether this is a formula for success is no guarantee. Franchises, by definition, have ongoing costs to the franchiser company in the form of a percentage of sales or revenue.
Other disadvantages include lack of territory control or creativity with your own business, as well as a notable dearth of financing options from the franchiser.
Other factors that affect all businesses, such as poor location or management, are also possibilities.Most franchises will provide a basic outline of what you can expect the costs to be, so you know exactly what you are getting into when it comes to buying a franchise vs starting a business.
3. You Don’t Need an Extensive Business Background or Education. After reviewing the pros and cons of starting a new business, buying an existing business, investing in a franchise, and becoming a consultant, you are in a better position to judge which option best suits you.
Find everything you need to know about Buying a franchise vs starting a brand new business franchising.
Trends and Facts About Vending Franchise Opportunities It’s no surprise that as society has become more on-the-go and convenience-oriented, the vending machine industry has grown. Although there are franchises in this industry, retail vending machines typically fall under the heading of a business .
back-to-back best franchise deal – qsr magazine Arby’s is the second-largest sandwich restaurant brand in the world with more than 3, restaurants in eight countries.
Although the cost to buy a franchise is typically much higher than starting a new business, there is also a reduced risk of failure with a well-established franchise. More money tends to go into a new business during the first few years of its existence while the owner is trying to build a customer base and increase brand recognition.