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Buying a Franchise Business
For anyone looking to own their own business, one of the best ways to do that involves buying a franchise.  There are many reasons to explore the world of franchise businesses, including a reduced risk factor (franchises have a higher success rate than starting a business from scratch), mass buying power (hundreds or thousands of franchisees across the country buy the same inventory and supplies), and a proven operating system that has stood the test of time.  When buying a franchise business, there are a number of factors to consider.  See below for an explanation of some of the more important ones on this list.

How to Buy a Franchise
There are literally thousands of franchise opportunities on the market today – in all kinds of industries from daycare to auto repair, and from fast-food restaurants to dog walking – and choosing the right one is probably the most important business decision you will make.  The first step involves investigating various fields that interest you.  Within any particular industry you will find dozens, if not hundreds, of companies that offer franchising opportunities.  For example, a brief search for something as specific as “print and copy franchises” turns up at least a dozen major companies to consider.  But selecting an industry you might enjoy should not be your only consideration.  After all, you’re contemplating buying a franchise business in order to secure your financial future.  Therefore, it is vital that the business you choose has products or services that are in demand in your area, plus something that offers the potential for growth.

Important Early Steps in Buying a Franchise
Once you have settled on the best possible option for a franchise business opportunity – no matter which industry – the next steps to take are both simple and sensible:

• Contact all the major franchisors in your selected field and have them send you as much promotional material as is available.
• Compare the costs from one franchisor to another – including the price of the franchise fee, the range of projected startup costs, and any ongoing royalty payments – and then create a “short list” that fits your pocketbook.  While price should not be your sole consideration when buying a franchise, it makes no sense to consider an option that will cost you more than what you can comfortably afford.
• Contact consumer groups in your state – or the franchise regulatory commission, which exists in 15 U.S. states – to see if there have been any problems with the parent company, including bankruptcies or lawsuits.
• Closely examine the financial health of the franchisor, which will be stated in something called a franchise disclosure document (FDD) that every company is required to provide to prospective franchisees.  The FDD also lays out the requirements each parent company places on its individual owners as well as the responsibilities they have toward you.  Since most major franchise operations are public companies, your stockbroker or financial analyst may have some insight as to the firm’s overall fiscal health.

What’s Next On the Agenda?
Having trimmed your list to just a few likely candidates, it’s time to conduct some in-depth interviews to find out more about the operation and your potential for success.  Learn all you can about the training program that each franchisee undergoes.  Understand whatever limitations the home office may place upon you – geographic restrictions, methods of marketing or advertising, hiring policies, and so on – and decide if you can live with those elements.  Map out the locations of other franchisees in your state, and make a point to visit with those owners to get their take on the relationship with the parent company.  Never back off from asking whatever questions you deem important – after all, it’s your financial future in the balance.

Financing Franchise Businesses
After completing the due diligence phase of the operation, it’s time to consider your financial circumstances.  This is a great time to write your business plan, since all the work you do in advance of this stage gives you the kind of information to plug into the process – how much money you will need up front, what sort of revenue you can expect at various stages of your startup operation, how many people you will need to hire and at what rate of pay, and so on.  There are a number of financing options for the person buying a franchise business, including loans from commercial banks or credit unions, tapping into your retirement account, obtaining a home equity loan, or securing a federally guaranteed loan from the U.S. Small Business Administration.  Some franchisors are even willing to help you with financing – this is one of the elements on the plus side of the ledger as you decide which franchise to buy.

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