Introduction: Some of the oldest and best organizations on a National and International scope are Franchises: Marriott Hotels, Shell Oil Distributors (as with all oil distribution parts of companies), McDonalds, Hilton Hotels, Warren Buffett’s company Berkshire-Hathaway, Inc. owns Dairy Queen, ServiceMaster, and the list goes on.
Not all franchises and franchisors are the same. Not all franchises are right for everyone. We are fortunate to have a Partner on The CDI Group Team with years of experience as a Franchisor, and a person who has financed a Franchisee, on both a National and International scope.
As an introduction to Franchising, we have listed a few of the most common questions we are asked about Franchising. After you and if you are interested in the possibility of becoming a Franchisee or a Franchisor, feel free to contact us.
QUESTIONS AND COMMENTS ABOUT FRANCHISING
Why would I want to buy a Franchise?
Franchises have the highest success rates and the lowest failure rates of any business in North America today! Over 95% of all franchises are still in business after five years because most come with built-in proven success formulas used by franchisees across the country. As you explore different Franchisors, you will find that different Franchisors provide you with varying degrees of on-going support for the life of the franchise. By support, we mean, marketing, training and management support guaranteed by your agreement with the franchiser.
Why should I pay royalties?
Royalties are the magic that makes the formula work. What would it cost you to hire a management, marketing, advertising and customer support team? The answer is… a lot more than the typical owner would ever spend! How much would you put back into the business? You certainly couldn’t hire this group for less than 10% and the vast majority of all royalties are between 5% – 15%. The up-side of royalties is that instead of the individual owner footing the bill to secure certain support services, the expense is shared with all of the franchisees within the organization.
How much money can I make?
This is the most frequently asked question and franchising allows the buyer the perfect way to get the answer. The franchiser will supply to the prospect a complete list of their franchisees with names and phone numbers. The Franchisor will strongly recommend that you call as many of these franchises as possible. This is wonderful because it allows the buyer to ask all of the “real questions”, such as: How much money can I make? How long did it take you to get your business up and running? Were there any surprises that I need to know about? What is the franchiser really like and any other questions that you can think of. Some franchisers have printed earnings claims in their UFOC documents but they will still insist that all interested buyers call the franchises and get the “real answers”.
If you are interested in more information about becoming a Franchisee, complete our Buyer Description. We will respond to your email. If you are interested in becoming a Franchisor, complete our Seller Description. We will respond to your email.