Here are some Frequently Asked Questions about franchising and about us in convenient categories for you to review.
If you still have a question, please contact us. People who like us say we’re pretty darn friendly.
Q. How much money can I make with a franchise?
A. Probably more than you think! There is no easy answer to this, but if you follow the FranNet system and do your due diligence properly, you should be able to find a franchise that meets your financial goals. Figure out how much you want/need to make (be realistic…) and then find the business that can get you there.
Q. When can I see a return?
A. How fast can you work? You should plan for not taking any money out of your business until 6-18 months after opening. The range depends upon the individual franchise and how well you operate the business. You should be able to get a pretty good idea of the timeline to profitability during your due diligence on the business.
Q. How much does a franchise cost?
A. Franchises don’t cost. They pay….if you do your part. There is a broad range of investment levels to fit a broad range of financial capabilities. Usually 25-30% of your own money will be required and the remainder can be financed (we’re assuming you meet the qualifications for financing—banks don’t loan money if you can’t collateralize it and show that you are a comfortable risk for them…surprise, surprise…).
Q. Why does a franchise cost so much?
A. Think about this in a different way. You will likely spend less to get your business profitable by following a proven franchise system roadmap to success than you would if you started from scratch and had to figure everything out on your own. Honestly, cost is a relevant term. Franchise investments range widely-from under $100K into the millions. Most concepts we work with are in the $100K to $500K total investment range (and remember you need 25-30% of this total out of your pocket). The bottom line is that you shouldn’t invest in something unless it’s comfortable for you. Don’t put everything you have on the line and hope for the best. Save that for Vegas!
Q. Can I have a passive investment in a franchise?
A. Better to be active than passive. But, there are many “semi-absentee” franchises that would allow you to keep your current employment. They operate on a “manage the manager” model that can allow you to keep your full-time job and build the business at the same time.
Q. Will I have to be there all the time?
A. Work 8 hours, sleep 8 hours, just not the same 8 hours… Some franchises require your full-time commitment and, as we mentioned above, there are others that can be operated as more of a semi-absentee or passive owner.
Q. How long does it take to find a franchise?
A. Typically, 2 to 4 months to complete the process properly.
Q. When can I open the doors?
A. When you have a key. Typically, 3-6 months from signing a franchise agreement. Some models require longer depending on necessary site selection, lease negotiation, and construction/build out.
Q. How do people typically fund their businesses?
A. With whatever they have! Personal assets in savings and investments that can be liquidated are one option. In some cases, home equity can be used. 401k/IRA funds are often used without paying taxes and penalty fees, a program called Roll Over for Business Startups (ROBS-ask us…we can help with this).
Q. Are there grants for businesses?
A. Not usually but we suppose anything is possible, right? But in 30+ years we haven’t heard of anyone getting a grant to fund their franchise.
Q. Will I have to put any of my personal money into a franchise?
A. Best to use your rich uncle’s. The answer is yes, usually at least 25% of the total investment will need to be yours.
Q. Are loans easy to get?
A. Not easy, but if you have good credit loans can be available.
Q. What types of businesses are “financeable”?
A. Most any business can be financeable depending on your personal credit qualifications.
Q. Does FranNet do financing?
A. No, we are not good at banking. But, we have partners who are fantastic and who work with us to help you find the best financing options for you.
Q. How will I know if I can do this?
A. After you go through our process you will be 90% sure you should either pull the trigger or put your pistol back in the holster.
Q. Does my spouse need to be on board too?
A. Oh yes. If not you will be sleeping by yourself or he/she may sabotage the deal.
Q. Why do people say franchising is a bad idea?
A. We don’t know any of these people. Seriously, they may know someone that didn’t “make it”. But, the success rate of people opening a franchise is far better than opening a business on their own. Bottom line is that you have to have some level of risk tolerance.
Q. Is a franchise better than a job?
A. Depends on your job. It’s not for everyone but then job security today is so poor that if you have the capabilities owning your own business will likely make you happier than making money for someone else.
Q. How will I make a decision?
A. By getting professional help to guide you through the process and then understanding yourself more completely. (Specifically we mean FranNet’s professional help. Not that other kind.)
Q. When will I know for sure that this will be a success for me?
A. This is one that only you can answer but we can help you envision what the future can be.
Q. How do I know if there will be customers?
A. No customers equals no business. Any successful franchise company can easily answer this one, but you should also be able to get detailed answers regarding this during your due diligence phase in speaking with other franchise owners in the system.
Q. Does the franchisor help me find my customers?
A. If not you should not talk to them. In other words, yes.
Q. What are examples of different customers in different businesses?
A. Good ones and bad ones. Fire the bad ones and go find more good ones. This will be dictated by the business type but in general retail customers buy a product and service customers buy a service. Another way of dividing this is business to consumer (B2C) and business to business (B2B).
Q. Can I have multiple types of customers or should I focus on one?
A. The more focused the better. Rifle versus shotgun.
Q. Can I have a home based franchise?
A. If your spouse/family can deal with it, yes you can.
Q. Does the location change the cost of a franchise?
A. Geographical location-not really. Physical location-possibly. Generally, services businesses require less investment than those that require brick and mortar locations.
Q. How do I find the best location?
A. By signing up with a good franchise that guides you through this process. All the good ones do this.
Q. Am I supposed to know how to negotiate a lease?
A. Again a good franchise will help with this but it’s usually good to also involve a local attorney to help you.
Q. Who does the build out and construction?
A. Franchises usually will either have firms they recommend or they will provide complete specifications for local contractors.
Q. You say it’s not just fast food, but that’s what I think of in franchising. What other types are there?
A. Give me a business category and most likely I can give you a list of franchises in that category.
Q. Is there a franchise that allows me to follow my passion?
A. Yes, we can consider this as one of your criteria but being passionate is not necessarily a dictator of success. Separate the function of the business from the function of you as the owner. It might be better to think of the business as the vehicle that will allow you to enjoy/participate in whatever you are passionate about!
Q. What does business to business mean?
A. A business selling to another business rather than a business selling to an individual consumer. McDonalds is B to C. A sign business is B to B.
Q. What is a semi-absentee business?
A. Keep your day job and be willing to devote 10-15 hours per week to overseeing your daily business operations which are run mostly by an on-site manager.
Q. Do people sell their franchises?
A. Only when they are rich enough! Seriously, this is something to consider when you buy a franchise. How long do you want to own it? Does the Franchisor help sell their franchisees when they are ready to sell their franchises? How many resales do they do annually?
Q. What does an exit strategy mean?
A. All business owners need an exit strategy, preferably when they start the business. It means how do I dismount this tiger when I am ready to move on to something else or retire? It’s hard to predict your future, but it’s worth the time to think about it upfront. What are your short- and long-term goals regarding your business? Don’t plan to fail by failing to plan.
Q. Can people structure their businesses for their family legacy?
A. Definitely. There are countless examples of second or third generations operating franchises. This could be part of your exit strategy we mentioned above.
Q. I don’t know anything about marketing a business. Does someone help me with that?
A. Marketing is one of the primary reasons to buy a franchise. It is critical to understand the marketing programs offered by franchise you consider. They’ve been there, done that. They should be providing you with the proven marketing strategies that will help your business grow.
Q. Is marketing the same as advertising?
A. Marketing is much broader than advertising. Marketing also includes personal selling, networking, public relations, branding etc. The world of marketing has changed dramatically in the digital age. You should select a franchise that fully understands what works in the age of the internet and social media.
Q. What types of marketing do franchises typically do?
A. All the above depending on what works best for that particular franchise/industry. In some cases this means strong internet presence and in other cases it means personal selling and/or local networking. A proven franchise will provide you with a marketing plan that works. But, you still need to execute that plan.
Q. Does the franchisor make me spend a certain amount on marketing?
A. Most do and some don’t. You will determine this during your due diligence. Whether they do or they don’t, YOU should. Remember the old saying, “you have to spend money to make money”? Well, it’s true.
Q. Does marketing and advertising really cost that much?
A. Two not so clear answers: “It doesn’t cost, it pays.” -or- “Half is wasted, you just don’t know which half.” Moral of the story is if you don’t prove that it pays then don’t spend the money on it.
Q. What is so special about FranNet?
A. Our history/track record. Our proven process. And of course your FranNet consultant, me.
Q. What is a franchise broker?
A. One who is a “matchmaker” between a franchisor and a franchise buyer.
Q. How much do your services cost?
A. Zip. Zero. Nada. Nothing. If we help you find that right franchise, and you invest in it, it’s a win-win-win. You win by getting your new business. The franchisor wins by getting you to help grow their system. We win because they pay us a referral fee for bringing you to them. And the cost is the same if you go directly to the franchisor or find the franchise through a broker. So just call us—why wouldn’t you?
Q. How do I get started with my FranNet consultant?
A. A personal consultation to determine if we mutually agree we are right for you and you are right for us. Then we ask you to take a Personal Franchise Assessment to determine your qualifications.
Q. How long has FranNet been in business?
A. The longest of any franchise brokerage company in the business. Over 30 years! And did we mention we are a franchise ourselves? Yep, we practice what we preach.
Q. How much does my FranNet consultant know about the local market?
A. Probably more than anyone else when you consider what is important to considering a franchise.
Q. I have a great business idea. Should I franchise it?
A. Not until you prove you can make it work with a first model location and then duplicate it with someone (a manager or partner) other than yourself. Even then you should talk to a franchise consultant that specializes in working with franchise startups. And have deep pockets—this isn’t something to undertake on a shoestring budget.
Q. What are the basic steps in turning a business into a franchise?
A. Prove the concept works in multiple locations, then document your systems so you can easily transfer the knowledge/success. Of course also consider patents and trademarks if applicable. Simply stated, it should be easily replicated with predictable results.
Q. Does it cost anything to start a new franchise company?
A. Yes. Take that “deep pockets” comment above seriously. In very broad terms you will probably be looking at a low six-figure investment.
Q. Is it easy for a franchise to become part of FranNet’s franchise inventory?
A. We wouldn’t say it’s easy but if you have a successful franchise that is sound financially and that will validate well with your existing owners you would have a good chance. We have a structured process for qualification.
Q. How quickly can a franchisor see success?
A. Most likely years, not months. Enough time to seeing multiple franchisees becoming successful is critical to this question.