Should I Invest In A Franchise? 3 Good Things To Consider
The idea of getting to be their own boss is one of the many reasons opening a franchise appeals to people – along with franchisor support, a ready-made business model and the chance to join an established brand.
There is no doubt about it: There are many advantages to owning a franchise. That said, there are certain factors you to take into account when asking yourself, should I invest in a franchise?
1. The Health Of The Franchise And Market
Not all franchises are created equal. Not only are certain brands more stable and profitable than others, there are also differences in the markets for existing and potential locations. This is why doing your due diligence is imperative.
Resources to research your potential new business are at your fingertips. You can learn about any franchise system’s terminations, transfers, openings and closings in the Franchise Disclosure Document (FDD).
Analyzing the local market is just as important. A McDonald’s is not going to flourish in an area dominated by health food establishments. Make sure that the brand suits the surrounding area and that that area is in solid financial shape. If half of the storefronts are empty and the other half are in disrepair, it is probably not a promising market for a new business.
Conducting research will help you answer the question, should I invest in a franchise? You should also learn whether or not locations in the area are available at a reasonable price, if there are enough consumers available and if the local workforce possesses the skills necessary to operate your particular business.
2. Consider Your Level Of Commitment
When some people think about owning their own business, they picture the ultimate type of freedom: being their own boss, making their own hours and calling all of the shots. While these notions are true to an extent, opening and running a franchise – or any type of business, for that matter – is not all fun and games.
At the end of the day, if you want your business to be successful and your investment to pay off, you need to be fully committed to putting in the time and dedication being a franchise owner demands. It is also important to think about the operating hours that will be most advantageous to the business, not to your own personal schedule. You need to cater to your customer base and the market in which your franchise is located.
Before you even think about making it official, have an honest conversation with yourself about the realities of owning a franchise and whether or not you can live with them.
3. Make Sure You Have Start-Up Capital
Franchises offer franchisees a certain level of support. However, you are still responsible for covering certain costs. One of these is the franchise fee, which can range from $20,000 to $50,000. Then there is the cost of training, build-out costs, contractor fees, professional fees, inventory, and signage. Your working capital must also be able to cover the cost of keeping your business afloat until it becomes self-supporting.
While the aforementioned costs may sound overwhelming, there are a variety of franchise loans you can obtain to get your business up and running. Alternative lenders offer some of the best benefits around. They can help you say “yes” to the question, should I invest in a franchise?
The Funding You Need To Get A Solid Return On Your Investment
Aggressive Lending is an experienced alternative lender that provides franchise funding for new unit financing, existing unit purchases, remodels, refinancing and recapitalizations. Our loans range from $100,000 to 10,000,000 for qualified borrowers and come with fixed-term rates that start at 7.5%.
You do not have to put up personal collateral and you can get full funding within 30 to 45 days. It is a refreshing departure from the traditional bank and SBA loan process, which is often lengthy and exhausting.
Additional benefits of securing a franchise loan through Aggressive Lending include:
- No pre-payment penalties
- No third-party fund control
- Six month interest-only grace period
- Multi-unit rollouts or financing
- No current experience necessary
- Available in all 50 states
- Out-of-state borrowers are okay
Aggressive Lending gives you the tools you need to get a solid return on your investment.