PROS AND CONS OF BUYING A FRANCHISE

PROS:

Brand recognition 

Many well-known franchises have national brand-name recognition. Buying a franchise can be like buying a business with built-in customers.  This will amount to great savings in customer acquisition costs and allow for more time in the overall operation of the business.  The goal is to work on the business, rather than in the business.  A good franchise system will provide you with the tools to work on the business.

 

 

WHY IS BRAND IMPORTANT?

A brand communicates specific information about an organization, product or service and distinguishes it from others in the marketplace. The products or organization are unique to that specific brand.  The brand is the identity of a specific product, service, or business and can take many forms including a symbol, name, sign, etc.  Today, great brands are realizing that people don’t necessarily distinguish categories.  For example, when you think of tin foil, you think of Reynolds.  When you think of bleach, you think of Clorox. When you think of famous singers you may think of Elvis, Frank Sinatra, Dean Martin, etc..

 

Point in question: What color are the Golden Arches?  YELLOW.  Anywhere you go in the world, you will find these yellow arches.

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A business concept: track record for success

When you buy a franchise, you are buying an established business model that has a proven track record.  Statistics show that franchisees stand a much better chance of success than people who start independent businesses.  The whole point again of the franchise model is that it’s been proven to work already both domestically as well as internationally. The roadmap has already been done so all you have to do is follow it.  As franchise companies state, you're in business for yourself, but not by yourself. Remember, sharks often feed together although they are considered enemies. 

 

 

The Chinese have a saying: a finger is strong, but a fist is more powerful. 

 

 

 

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Management training

When you buy a franchise, you get all the equipment, supplies and instruction and training needed to start the business. You also get ongoing training, and help with management and marketing. Your franchise will reap the benefit of the parent company's national marketing campaigns, creative materials, national spokespersons, technical trainers, on-line training, webinars, etc.  This is the most important part for entrepreneurs as business owners don't plan to fail, rather,  they fail to plan.

 

 

Proprietary methods and processes 

From day one, you have cutting edge systems and technology right at your fingertips that you didn’t have to invent or put any resources in to.

 

 

CONTACT ROBERT MARGETTS TODAY FOR MORE INFORMATION AT: 770-316-4951

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Marketing and advertising plan to follow

Brochures, radio and television commercials, yellow pages, newspapers, flyers, coupons, direct mail campaigns; This is another huge time saver as you just have to pay for what you need and you’re ready to go.  Hence, marketing will be more  interesting and challenging area as it is made up of many coherent ideas that consistently repeat the big idea or brand message.  By continually repeating the same television commercials and weekly coupons, the brand continues to build awareness.

EFFECTIVE MARKETING:

Recruiting and staffing

Finding good employees is crucial to the success of the franchisee. A franchise business with a recognized name will have greater recruiting pull than an unknown business entity.

 

Purchasing power

The collective buying power of a franchise group allows for lower costs in purchasing inventory and equipment. There is power in numbers!

LARGE COMPANIES HAVE BETTER BUYING POWER......

CONS:

Start-up costs

The average initial franchise investment can be rather expensive. 

1. Hampton Hotels (Mid-priced hotels): $3,716,000 - $13,148,800

2. Ampm (Convenience store & gas station): $1,786,929 - $7,596,688

3. McDonald's (Hamburgers, chicken, salads): $1,057,200 - $1,885,000

4. 7-Eleven Inc. (Convenience store): $30,800 - $604,500

5. Supercuts (Hair salon): $112,550 - $243,200

6. Days Inn (Hotels): $192,291 - $6,479,764

7. Vanguard Cleaning Systems (Commercial cleaning): $8,200 - $38,100

8. Servpro (Insurance/disaster restoration & cleaning): $127,300 - $174,700

9. (Submarine sandwiches & salads): $84,300 - $258,300

10. Denny's Inc. (Full-service family restaurant): $1,125,609 - $2,396,419

 

 

Less Freedom

Franchisees are required to share financial information and conform to uniform operating procedures. You have to stay within the rules and guidelines that the franchisor sets or you could easily lose your franchise.

Royalty Payments:

Each and every year franchisees are required to make royalty payments in return for support in operations and advertising. Some franchisers may not provide all the necessary resources for the success of your particular location. Talk to other franchisees for feedback on the level of support they receive.

CONTACT ROBERT MARGETTS TODAY FOR MORE INFORMATION AT: 770-316-4951

rstom03@aol.com
 

FINANCIAL  REQUIREMENTS

For Example:

McDonalds

Investment:
Minimum Net Worth:	$
Cash Investment:	$500K
Total Investment:	$1.1-1.8MM
Average Total Investment:	$1471K
Fees:
Initial Franchise Fee:	$45K
Average Franchise Fee:	$45K
On-Going Royalty:	12.5%
Average Royalty:	12%
Advertising Fee:	4%

Investment:
Minimum Net Worth:	$
Cash Investment:	$500K
Total Investment:	$1.1-1.8MM
Average Total Investment:	$1471K

Hampton Hotels

Investment:
Minimum Net Worth:	$
Cash Investment:	$500K
Total Investment:	$1.1-1.8MM
Average Total Investment:	$1471K

Investment:
Minimum Net Worth:	$40K/Rm.
Cash Investment:	$50K
Total Investment:	$3.7-13.1MM
Average Total Investment:	$6800K
Fees:
Initial Franchise Fee:	$50K
Average Franchise Fee:	$50K
On-Going Royalty:	5% Gross Rm. Rev
Average Royalty:	5%
Advertising Fee:	4% Gross Rm

Investment:
Minimum Net Worth:	$40K/Rm.
Cash Investment:	$50K
Total Investment:	$3.7-13.1MM
Average Total Investment:	$6800K
Fees:
Initial Franchise Fee:	$50K
Average Franchise Fee:	$50K
On-Going Royalty:	5% Gross Rm. Rev
Average Royalty:	5%
Advertising Fee:	4% Gross Rm

 

 

A&W Restaurants

Investment:
Minimum Net Worth:	$1MM
Cash Investment:	$
Total Investment:	$1.0-1.6MM
Average Total Investment:	$1300K
Fees:
Initial Franchise Fee:	$30-50K
Average Franchise Fee:	$40K
On-Going Royalty:	6% Gr. Receipts
Average Royalty:	6%
Advertising Fee:	4% Gr. Rec.

Denny's

Investment:
Minimum Net Worth:	$1M
Cash Investment:	$350-$400K
Total Investment:	$1.178-2.4MM
Average Total Investment:	$1618K
Fees:
Initial Franchise Fee:	$40K
Average Franchise Fee:	$40K
On-Going Royalty:	4%
Average Royalty:	4%
Advertising Fee:	4%

Supercuts

Investment:
Minimum Net Worth:	$300K/100K Liq
Cash Investment:	$111-239.7K
Total Investment:	$97-208K
Average Total Investment:	$152K
Fees:
Initial Franchise Fee:	$22.5K
Average Franchise Fee:	$22K
On-Going Royalty:	4% Yr. 1/6% succ. Yrs.
Average Royalty:	5%
Advertising Fee:	4

If you took a month off from your business, would your overall sales stay the same or decline?  Could your company survive without you?  Is your business built around you, or a system?

 

Are you tired of:

1.     Answering the phone while standing on a ladder in -5 degree weather?

2.     Having to price your services cheaper than your competitors just to get the job?

3.     Having your employee quit and start his own  company?

4.     Never really taking a long quality vacation with the family?

5.     Cash flow problems?

6.   Finding new ways to grow your business?

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• Go it alone

• Hire a consultant(s)

• Align with a franchise

When you join a franchise, you join a family.

 

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