Franchise FAQs (Frequently Asked Questions).
Are you looking to be your own boss, buy a business franchise and join the ranks of entrepreneurship at a business Franchise? As an entrepreneur you have some questions about opening a franchise. Here we tried to explain franchise FAQs (frequently asked questions), and terms an entrepreneur may logically have. The answers are general in nature which may vary from one franchise to another. See if we covered questions and concerns you may have below and if not, feel free to contact us.
What exactly is franchising?
When you buy into a certain company, this allows you to use the rights and the business concept that goes with that particular brand. All you have to do in return is pay the initial franchise fee and a low percentage of your monthly profits or royalty.
What defines a franchise?
A franchise is an agreement with the parent company and yourself. When you sign into a contract you are allowed to use any and all of the logos, markets all the products within that franchise and use all the business plans to succeed in operating the franchise. There will a legal agreement binding both parties together with only a small initial fee of buying into the business and what is called a royalty fee through the profits.
Is it true that it is better to buy into a franchise rather than start my own business?
It has been proven time and again that buying into a franchise is the best route to go. This is due to a variety of reasons. You would be buying into a company that already has a national reputation. Through pre-made policies that are guaranteed to make the business succeed and you don’t have to go through a trial and error period.
How much does it cost to buy a franchise?
It varies from company to company. There are many factors to take into consideration like the population of your city and if you are here to build a store or buy it from another owner. It can range from a couple grand all the way to a million dollars.
Which franchise would be best suited for me?
This depends on where your skills lie. If you are mechanically inclined, then go for an auto shop; if you are more of a manager go into retail etc.
What are some of the first steps to buying a franchise?
The first step is to do research and find an open opportunity near you after which you can talk to a business broker or a franchise consultant.
How do I get the money to buy a franchise?
Depending on your current financial situation you will be able to get a loan from a bank that deals with the head office of franchisor company.
What’s franchise fee and what’s included in it?
This is one time initial fee paid by a franchisee at the time of starting the franchise. The use of franchise brand name, operating systems, logo, trade dress etc. is included in the fee.
What are the ongoing fees for a franchise?
Royalty and advertising fees, generally, based on percentage of sale are charged.
What do I receive for my royalty payments?
The franchisor provides ongoing support to its franchisees in all aspects of their daily operations.
What are the steps in becoming a franchisee?
Following is the general procedure with some variations from franchise to franchise
- Submit your information
- A franchisor representative will contact you for an initial phone meeting
- Attend a franchise showcase, webinar or and information session.
- Fill out a franchise application and submit
- Attend discovery day
- Become a franchisee
Do franchisors help entrepreneur secure financing to become a franchisee?
Franchisors may direct you to a number of lenders that have provided financing options to other franchisees.
What type of training do I receive?
Franchisor provides necessary training covering all aspects of conducting day-to-day business that may include classroom training and hands on/ in store training for you and your management employees.
What support do I receive from a franchise?
Among many other things, franchise provides proven business model, site selection support, lease negotiation support, construction support and guidance, store opening support, ongoing operational support.
What is the total investment?
This includes the franchise fee, construction cost, opening inventory, first and last month rent, opening promotions and working capital
Am I allowed to sell the business?
If you have done well for several years then you can sell the business like you would do with any other business. However, prospective buyer needs to be approved by the franchisor.
What is unencumbered cash?
Unencumbered cash is cash on hand, in a savings account, chequing account or GIC account, otherwise known as “liquid capital”. Home equity and RRSPs are not usually considered unencumbered, unless you can borrow against your home or RRSP. Your assets must be in Canada and you must be able to provide appropriate documentation to substantiate all assets.