Sometimes, I stop to reflect upon what a broad and diverse market segment franchising is. If you are considering franchising your business, it is important to remember that franchises come in many sizes and shapes.
For example, some franchise opportunities require an initial investment under $25,000 cash, while others involve an outlay in the multiple millions of dollars to open. Most franchises fall somewhere in between those numbers. What will be the anticipated initial investment when franchising your business?
Regarding sales, again, there can be a great variance. Some franchises generate revenues under $100,000 per year, and some have millions of dollars in annual sales. Again, the majority of franchise locations have sales between these ranges. If franchising your business, what do you predict the average annual sales will be per location?
More important when franchising your business, how much money will the Franchisee make? Some Franchisees want to supplement their family’s income while others seek to support a lavish lifestyle.
Also recognize that there can also be a substantial difference in the time commitment required by a particular franchise opportunity. Some franchises are designed as part-time businesses; however, many require a full-time commitment. Some Franchisors stipulate that the owner must work 50 hours per week or more, actively operating the business. This is another consideration when franchising your business.
Franchises with lower initial investments often are home-based businesses, frequently providing residential or business services. Examples of such franchise opportunities are carpet cleaning, senior services or blind companies.
Franchises at the upper end of the investment spectrum typically are large restaurants, hotels, childcare centers and similar businesses requiring the Franchisee to purchase land and construct a building. One NFA client has recently launched a franchise program requiring a substantial initial investment of $2.5 to $5 million, Stripling’s General Store. Stripling’s is a 7,000 to 13,500 square foot full-line grocery store plus butcher shop, gourmet items, food bar with prepared foods, convenience store items and more.
The majority of franchise opportunities fall somewhere between these two levels of investment. Many restaurant franchises have an initial investment as low as a quarter million dollars. Much of this amount is for equipment and build-out.
As you can see, if you are considering franchising your business, there are thousands of different franchise programs in a wide variety of industries, requiring different investments of time and money and varying skill sets. There is a franchise opportunity out there suitable for everyone who is willing to follow a system of doing business.
Remember, unless properly disclosed in the Franchise Disclosure Document, you cannot make financial performance representations (FPRs) to prospective Franchisees when franchising your business. FPRs when franchising your business have been addressed in previous NFA blogs.
Thinking About Franchising?
NFA Franchise Consultants have the experience to help businesses franchise. Just watch and listen to some of our client case studies and video testimonials. We can HELP YOU and it doesn’t cost anything to call and talk to us!
So, if you are still asking the “should I franchise my business” question over and over with no clear direction, give us a call at (706) 356-5637, or contact us through our online form. We look forward to helping you take your business to the next level and beyond.