Franchise articles - Acquireo.com

Franchise articles - Acquireo.com http://www.acquireo.com/businesses-for-sale-resources/franchise-articles.aspx Franchise articles - Resources - Businesses for Sale en-gb Copyright Acquireo.com 2008 Acquireo Franchise articles Tue, 13 May 2008 14:44:35 GMT 20 http://www.acquireo.com http://www.acquireo.com/pub/email/headers/logo-small.gif Acquireo - The Internet's PREMIER listing of Businesses For Sale 236 63 Hardware store franchises – True Value and Ace Hardware http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/hardware-store-franchises-true-value-and-ace-hardware.aspx Almost every household in the country will visit a hardware store at least one a year. This potential for business is one of the reasons that a hardware store has always been one of the more popular businesses that an owner can start or buy. The generic hardware store exists in the mind’s eye as a retail store that a person can go to and buy just the right nut and bolt or the odd sized screw. This mythical store is run by knowledgeable people who can answer almost anything that has to do with home repair. This is what the public has come to expect when visiting a hardware store. Some chain store outlets have gotten away from the help side of hardware stores and just sale products off the shelf. Getting answers to questions in these stores is not what the hardware store visit is about. The great help of the old type hardware store is missing. Except in those stores that are run the old fashion way and continue to prosper as their customers are repeat customers and would not think about going somewhere else to shop. Two franchises that carry on this tradition are True Value and Ace Hardware associated stores. True Value stores True Value is the third largest co-op in the hardware business. True Value is a cooperative that allows the store owner who is a member to buy merchandise at reduced prices since this group can make large wholesale purchases. The store owners can also enjoy the advantage of group advertising buys. Being able to buy at the large volume prices makes the advantage a significant profit maker. Group advertising can also reduce the cost of getting customers into the store. The average True Value store investment The average investment in a True Value store works out to about $35 a square foot for inventory. The fixtures or equipment will come in at about $8 a square foot. The start up cost can vary by area of the country, but the average is about $4 a square foot. The additional cost to become a True Value store can be found by contacting True Value corporate. Ace Hardware stores Ace Hardware is the largest hardware co-op Like True Value it offers members the capability to buy merchandise through the co-op at reduced prices and thereby make more profit from sales. They also offer the advantage of group advertising which reduces the cost of getting customers through the doors. Group buying of the co-op saves all of the member’s money as the co-op gets better pricing due to large volume buying. This savings is then passed on to the members and allows them to make more money. Ace Hardware Investment Structure The Ace membership application is about $5000 Initial stock ownership is another $5000. Liquid capital needed to start a store is $250,000 with a loan from Ace of an additional amount of $390,000 to $740,000, which depends on the store size. The total investment is between $650,000 and one million dollars.Land and building cost are not included in this pricing. The Ace investment numbers are based on a 12,000 square foot store. Dollar amounts are for fixtures, inventory, office equipment, computer system and operating costs. Other factors that will help the owner Both of these hardware operations offer the owner training and seminars, which are designed to help the store grow. Suggestions for operating the store more efficiently can be taken in and used to good effect. Special purchases that include a targeted advertising campaign will attract customers into the store. The staff’s helpful attitude will impress the customers and insure they will come again. Buying a local hardware store Local stores that are affiliated or not do come to market every now and then for purchase. The owner may be willing to deal very favorably in order to make the sale. Contact a business broker or look up businesses that are for sale listed on the Internet. A good business broker may be wise to contact, as these pros are very good sources of current information. If an existing business is for sale, the price may be excellent due to the store being established. A store with cash flow is always a business to be considered. Customer habits are in the favor of the new owner as long as the service stays the same or gets better. If you are going to make some significant changes, make sure they are well thought out before putting them into practice. If there is a strong benefit to the customers, they will probably be met with enthusiasm. An old owner may be willing to help with the financing of the business. In most cases the price of the business will increase some and will have to be negotiated as part of the sales contract. The other way to get the needed money is to see if a business lender would be willing to give you the needed loan. Many of these money lenders are easily found on the Internet. Conclusions The hardware business is one business that has a variety to customers that need what the store is offering. Every person of age is a possible customer. This large potential customer base is what will make a new hardware store quickly grow and in the right location become profitable. . As with all retail stores location is important. Name recognition is also very helpful which is why the two co-ops have so many members. Customers will come to a store with a familiar name. Friendly, helpful and knowledgeable staff is critical if you want to stand out from the box stores. Their pricing will be competitive to yours, so you have to beat them by having better help. If you try to compete on price alone, you will be fighting a losing battle. Store hours are also important in this business. Early openings are almost a necessity of the business. People like to get up and get started on projects. Acquireo.com - Bill Henthorn Mon, 15 Oct 2007 14:35:37 GMT Franchise articles The UPS Store Franchise Opportunity http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/the-ups-store-franchise-opportunity.aspx The UPS Store is affiliated with Mail Boxes, Etc., one of the more successful franchises, and is also owned by UPS. This new franchise operation is growing rapidly. The UPS Stores were born when UPS purchased Mail Boxes Etc. and offered the rebranding of these franchises to the UPS Stores. Since that time (2003) the number of stores has almost doubled. This franchise has been rated one of the best available by Entrepreneur magazine on the many factors that are important to a potential franchise owner. The variety of services offered by UPS Stores, is allowing these store to make inroads against competitors. The UPS stores offer mail delivery boxes, mailing services, shipping services, copy services, faxing services and other printing type collating services using copy machines. This variety of services brings in a large number of different types of customers with different needs. This opens the franchise to many cash flow streams. UPS name recognition The name recognition of UPS would help any franchise owner because this name has a long history with the public. The backing of a significant corporation also lets the franchises enjoy the advertising campaign backed by a larger corporation These TV ads will help drive traffic to the UPS Stores. The UPS name recognition will help a new store get up and running quickly and create immediate cash flow. This factor has been one of the reasons that the UPS Store franchises are rapidly opening. UPS Store franchise costs The typically new franchise owner will need approximately $50,000 in liquid assets to acquire a franchise. This can vary by area the store will be located in. The startup cash required will be about $7500 with a total investment over time of a range from $138 thousand to $245 thousand. Mail Boxes Etc. will help with up to $50,000 financing for fixtures and equipment. The franchise fee at this time is about 29 to 30 thousand dollars. The fees and services at a UPS Store The fees charged to use the services at a UPS Store are competitive and in some cases significantly lower than the same service from another business. The combination of services that the UPS Store offers makes it convenient for the customer to get several routine jobs done in one place. A person can make a copy and then fax it to another party. Color copying used to be very expensive, but the new copy machines have allowed companies such as UPS Stores to price this service at a very reasonable level. Shipping, mailboxes and sending mail are also offered at these stores. This convenience of services makes these stores very useful to the customers. Business travelers can use these stores as temporary office when traveling. UPS Store services compared with buying the equipment for your company The cost of the services that UPS Stores provide can be compared with the cost of having the equipment on hand at the place of business of the customer. Since some of the services are not used all of the time at a business, the cost of the equipment would be a bad investment. If you only need color copies every now and then, a color copy machine would be an unjustified expense. The lower costs of doing color copies makes owning this equipment and the service cost an easy comparison. Other services may be just a convenience and not a significant cost difference. Each situation must be analyzed on its own merits.Basically the upfront cost must be compared with the annual expense the customer spends on the service. A new UPS Store vs an existing one This is always a consideration when buying a business or starting a new one. An existing business has a clientele that has a pattern of using the services. A new business will have to take the time to develop this client base. This can mean a real difference in cash flow for a period of time. The decision is the cost of the new business versus the cost of the existing business. If the difference in price is really large, the extra cash flow during the start up period may not make up the cost disparity. Each situation must be analyzed and compared with facts. The franchise company can give excellent stats on new companies and their growth. The current owner of a franchise can supply financials on his business. This makes comparisons somewhat easier to do. There is also a Federal law that makes disclosure of information by a franchise company meet very strict guideline. These factors will show the potential owner which situation makes more sense from a financial comparison. The franchise company may have some contractual rules that must be followed when buying an existing franchise. If you are considering a new store, remember that location is a critical consideration. The franchise company will have very good information on this aspect of a new store. You also should speak with a few other owners of the franchises. Conclusions The UPS name has great value to the franchise and will draw clients to the store. With all of the services that are offered in a store, this will also help to develop a steady base of customers. Businesses and individuals will all have reasons at one time or another to use the services that are provided. The combination of services that are offered in a UPS Store will drive many different types of customers through the doors of the business. When they see the other services offered they would often find a reason to use others than what they came to the store for. This extra money spent is the direct result of the customer being in the store. Business people and individuals will remember the other services offered once they see what is offered when they visit the store. This new perspective of what can be done in the store will create a new customer use. This UPS Store franchise has a solid business basis and should be seriously considered by a person seeking to go into business for themselves. Acquireo.com - Bill Henthorn Fri, 12 Oct 2007 00:11:49 GMT Franchise articles The top franchises listed by business brokers http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/the-top-franchises-listed-by-business-brokers.aspx Like all things in life, there are always list of the top this or that. Franchises are no different and can be put in list like most popular, range of cost and ease of purchase. Business brokers also have their own favorites to show prospective clients. If a potential franchise buyer is thinking about buying a franchise, then looking at rankings by various categories makes sense, as it will let them learn a great deal by comparing different franchises. The Internet is a great place to learn a lot from these list in a short amount of time. <h3> Types of franchises </h3> There are many different franchises besides the fast food ones that most people are aware of like the hamburger chains, the chicken franchises and the seafood places. There are many different retail type franchises, service franchises, trade type franchises and tax prepares. In fact almost any business type you can think of has a franchise competitor. Some of these franchises have a very high rate of success. Some may depend mainly on the individual that buys it such as a service business. If the owner is good at prospecting and selling their service they will be successful. It they are not good at it they may not make it, as the franchise is not well enough known to bring in enough customers. This accounts for the lower ranking of many of the franchises a person has never heard of and had no idea they even existed. <h3> Ratings by cost of the franchise </h3> A person can buy a franchise for as low as a couple of thousand dollars and the price goes up from there to well over a million dollars for some of the name restaurants. The low cost franchises seem to be home based and a single person operation. What many of them offer is just a business plan on how to do the business. This can be a steep cost for a plan with no other support or help. At the high end you get training, on going support, a serious edge on being successful as these franchises have a very high percentage of success. Popularity of these high end cost franchises also accounts for the fact that they sell at the upper end of the range. The success rate is high so they are popular. Their popularity means the franchise company can get more money for them than the lower cost franchises. It is all about future success to the new owner and getting his investment back via profits. <h3> Ease of purchase ratings </h3> Low cost franchises are higher in the ratings since it takes less money to buy. Higher cost franchises may be more difficult to buy unless the buyer can arrange financing privately or through the franchise people. An investor group or a very well off private party usually buys the really high price franchises. Low cost franchises will sell on terms as they have little further cost in the franchise. The higher priced one will help a great deal in finding the money for a buyer they feel will do well with the franchise. They have over time developed all kinds of finance help from lenders to investor groups. They are really interested in selling to people they think will be good franchise owners. They want to have networks of successful franchises. Business brokers have a selection of businesses to choose from Businesses brokers usually represent sellers who have an existing business they wish to sell. Their lists are varied among all of the types of businesses at a range of selling prices. When a buyer comes to them they can show buyers businesses that are in trouble and ones that are prime examples of a successful operation. They also have all types of businesses for sale, so the buyer is presented a choice of business types. This could be advantageous as the buyer may see something in the list that they have not thought of or even considered. The business broker if experienced will have a very good idea of the real worth of the businesses that he represents. It is very likely professional evaluators arrived at the selling price. The prices have some fudge factor built in, but they are closer to the real value than a guess. The great many choices these brokers are able to show prospective buyers should work to the buyer’s benefit. The choices are many and of all types of businesses that could be considered for purchase. This ability to look at all types of businesses at the same time and compare prices and potential investment return is one of the reasons that all buyers should at least have a discussion with a business broker or two. These conversations will cost nothing, but they can help the buyer make better choices between a startup franchise and an existing business. <h3> Talk with other franchise owners </h3> If you have narrowed the businesses to certain franchises, it would be wise to speak with owners of other similar franchises. The information they will provide will help you make a better decision When you find out what they like and don’t like about the franchise, this is excellent material to think about. There is nothing like being warned about areas of contention and possible discontent in running a franchise. At least it will give you areas to question with the franchise people. After the sale is not the time to find out about problems you were not aware of and it certainly is not the time to be surprised. You may also find that there is room for some negotiation on the franchise price that was supposedly set in stone. Nothing is always locked in stone. Something that is claimed to be company policy is just that. It is an arbitrative decision and was not handed down from on high. Policies are changed all the time within companies. If you really do not like the policy walk away and find a different deal. Conclusion Looking at the ratings of franchises by different criteria will give the buyer many ways to look at different franchise opportunities. Comparisons by different means help the buyer get a perspective on the business they may get no other way. Looking at price ranges and understanding what they really mean is an eye opener to the buyer of a franchise. The fluff in the price can be guessed at by comparing different franchises. Also popularity and success seem to have some degree of predictability. Taking the time to discuss what the business broker may have in his client list may be more than worthwhile. There may be a business on the list that the buyer never considered that would be better suited to the buyer’s needs and pocketbook. You will not know unless you look. Use the Internet for comparing the different franchises. This is the fastest and easiest way to do the comparisons. Any information you want on the franchise business can be found on the net. This is a superb source for franchise information, stats and ratings. The net makes finding any information you want available by searching for it through a search engine. Acquireo.com - Bill Henthorn Mon, 02 Jul 2007 12:50:41 GMT Franchise articles Running a successful franchise http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/running-a-successful-franchise.aspx Buying the right franchise and then running it successfully go hand in hand. The major franchise companies have a vested interest in seeing that a buyer connected with them does well and does not have to close the doors in failure.With this in mind, they will do every thing they can to help the buyer end up running a successful franchise. Here are the key elements to running a successful franchise. <h3> Start with a successful franchiser </h3> When you buy a franchise and start with one that is uniformly successful with new franchises; then you have increased the odds of being successful. They know the ropes and they teach how to do it and what to do. They leave very little to chance or good business luck. With a detailed business plan and a willingness on your part to follow it to the letter, you will be on the road to success. Their plan will cover every aspect of running a franchise. They will teach you how to manage employees after you have hired them. You will learn about rewards and discipline. They will show you efficient ways to keep your paper work so that it can be accomplished with the least amount of time. You will be directed to good suppliers and other business services that will serve the business well. If you have any question they are a remarkably good source for an answer as they have years of experience and they have probably solved the problem before. So, give yourself a leg up and start out with a proven winner. You will more than likely get to your profit range sooner than later. <h3> Follow their plan and ask lots of questions </h3> They have already invented the wheel. You do not have to do that again. Their plan has been proven successful many times and any corrections have already been made. It does not hurt to ask questions so you can see the reasons behind their suggestions, which will help you, understand with more depth. Getting to the basics of the plan will give you more faith in it. Understanding why they came up with a certain solution to a problem or a potential problem is enlightening and will let you see how smart they are about the franchise business. Respect for their knowledge will come with time as you see their solutions come to resolution. <h3> Take advantage of any seminars and owner meetings </h3> Take advantage of any seminars, training sessions or owner meetings that come available. These can be gold mines of information and you will meet other owners who have the same problems and have resolved them. Take advantage of a room filled with experience. Ask questions and listen carefully to the answers. This suggestion is particularly valuable when you first are in the business and every aspect of it is new to you. Later send your assistants to the meetings and let them get educated. A well-trained staff should be the goal of any owner, as this will improve the overall performance of the business. Over time it will also let you have some free time, as you know the business is in good hands. Reward your staff for doing their job well. A compliment given at the right moment can do wonders for the morale of an employee. Employees like to feel that the owner knows they are doing a good job. Complimenting on their work is very well received. <h3> Hiring and firing employees </h3> Finding good employees who show up to work on time, do their work with a minimum of mistakes and come to work drug free is the bane of most owners of a franchise business. This is especially true in the fast food business. What to look for when hiring potential employees? If they have worked somewhere else, good references are always a good sign. If they have not been employed before look at their high school grades. Good students demonstrate two things by their grades. They are willing to do the work to get them and they have the ability to be taught. There is nothing wrong with having smart people work for you. If they have real talent, promote them as soon as possible to more responsible work. A good staff will make your job as owner and manager much easier to do. Another way to check out a young person is ask for any letters of reference they may have from teachers, coaches or their church. A sincere letter of reference is a very good sign of good character. If an employee is failing at the job, have a meeting and let them know where they are failing and what they need to do to improve their performance. It they correct the problem that should be the end of it. If they do not improve to the point you want, let them go and tell them why. Document every thing about this employee problem including the first meeting and any subsequent meetings. You may need it later if the employee tries to come after you for some reason. Being able to prove what you discussed and why will go along way toward proving the firing was justified. <h3> Paper work </h3> Paper work has bogged down more than one owner and caused problems that should have never happened. The use of a computer is worth learning, as it will help to organize this least liked activity for most business owners. If you can afford it, hire a person that does it for a living and likes to do the work. This will help a great deal with what you have to do. There are certain reports that are mandatory for all businesses, like employee payroll tax, sales tax and disability in some states. These need to be accurate and turned in on time. Bring in a professional and spend your time on marketing and other areas that you enjoy. Your business will be better off for it and you will be happier as the owner. Conclusions These areas just touch some of the basics that are needed to run a business in a successful way. There is the whole area of marketing and advertising to be considered. Listen to what the franchisers suggest or offer in these areas. They know what works and at least in the beginning you will be well served to listen to their advice. Customer relations are an entire area for a seminar meeting. Handling of the customers who visit you business is critical to growth. Most businesses depend on repeat customers to grow. How a customer is treated the first time they have dealings with your business could impress them or sour them on doing future business with you. Customers respond to smiling, courteous, competent help. They do not like to deal with lazy, dolts who could care less. If you have such a person working for you they should be the first person you let go. The Internet is a very good place to read about successful franchises and how they do it. There are also franchise associations that have very good publications and meetings that an owner can learn from. Knowledge and education are very important to a successful continuing operation. What you know can help. What you do not know can hurt you. It is obvious what you should do to gain the path to success. Acquireo.com - Bill Henthorn Mon, 02 Jul 2007 12:44:09 GMT Franchise articles How to check out a franchise http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/how-to-check-out-a-franchise.aspx Check out before you buy is the road to purchasing a franchise. If this is done first, then there will be no surprises or regrets later. Any good businessman or woman would find out as much about a franchise and its operation before purchase as humanly possible. Not all franchises operate the same and each has its mandatory rules that are part of any purchase contract. The contract other than stating how the franchise will be paid for and when, will also lay out in detail what the franchiser has agreed to do and what the buyer must do after becoming the owner. These are the elements that should be looked into before purchase of a franchise. Examples are: Who can you buy supplies from and is there a requirement to pay so much a month for advertising controlled by the franchiser. Are there mandatory meetings and training for the owner or his staff. Each major franchise has different elements like this in the contract they make with the buyer. These are the details that should be looked into before purchase. How do you do this and where are good places to seek the answers? <h3> Other owners </h3> Owners of similar franchises that you are considering are great sources of information when you can find one that will speak with you. If you get them talking try to find out what they like and what they do not like about running the franchise they own. Do they have any suggestions for you as to how to negotiate the purchase or is it cut and dried as far as the franchiser is concerned. Why did they end up picking this franchise out all of them that are available? Would they do it again? Did they buy from a previous owner or direct from the franchise company. This is an important question, as their answers will shed light on detail that could be valuable to you in your discussions with an owner or the franchise company. Find out about the help that they really got from the franchise when they first started. What did they think of it? If they are successful, what do they contribute their success too. Do they just have a terrific location or are they just great business people. This answer could help a prospective owner evaluate what they could do if they owned a franchise. <h3>Franchise for direct answers</h3> Most people who buy a franchise get most of their answers direct from the franchise people. Major franchises have a very detailed plan they go through when talking with a potential owner. They have very specific criteria that the possible owner must meet in order to continue the discussion. They have minimum financial requirements that the buyer must meet or they will not go further in the discussion. If you meet their criteria then that is a plus, as they know what is needed for a new owner to be successful. It also means that they have a live one on the line. Remember this is a sales situation and the details will be presented in the best possible light they can use. Your part of this discussion should be in two parts. Listen very carefully to what they say and ask every question you can think of. Find out in great detail what they provide after you become an owner. Find out what is required of you after you make the purchase. Find out about current help as well as future help in running the franchise. There really should be no question that they cannot give a detailed answer too since this is their area of expertise. In this situation there are no dumb questions, there are just questions that you do not know the answers too. The worst mistake you can make is to not ask and assume you know the answer. Your assumption could be absolutely wrong and you need to find that out before the purchase. Ask about the success stats they have on new owners and what caused the failures that have occurred. Major franchises have a very high success ratio with new owners. Lesser franchises may have a very spotty record in this area. You need to know before you buy. <h3> Business brokers as a source</h3> Reputable business brokers are a great source for getting good information as will as finding solid businesses that are for sale. An experienced broker in this area will have a sixth sense about deals that he has listed. They will know the real reason for the sale, which may not be what is given at first. They also will have inside knowledge about franchises and how they operate. Pick their brain and let them earned your business. <h3>The Internet source</h3> With today’s Internet, there is very little that a serous searcher cannot find out if they are willing to spend the time and effort on the Net. You can read all sorts of sites that supposedly will tell the inside information about franchises. You can find success stories and how to do things on the Net. This is one source that should be checked out thoroughly by a potential buyer. One thing you will find when looking on the Net, is that you never knew there were so many businesses that a person could consider as a franchise buyer. It does not matter what your interest are, there is a franchise that will use that interest to become a business. You will notice that these little known franchises have low starting purchase prices. If there is one that strikes your fancy, make sure you ask what you get for the money that they want you to pay out. If it amounts to just a business plan, then it may not be worth the expense. This is the reason to ask lots of questions.The questions will ferret out the sweetheart deals and the potential winners. Conclusions Due diligence is a necessity. When thinking of buying a business, this should be the first step toward a possible purchase. Ask questions; seek out solid information from sources that you know to be reliable. Do your homework, as this is the only way to make sure that you do not become the proud owner of a white elephant. Use all of the sources listed here and any you can think of or find while doing your research. Quality information allows the buyer to make superior decisions.A serious buyer of a franchise should be willing to spend the time and effort to check out the deal. This will do one of two things, make the buyer run away like he is on fire or make buyer ready to do the deal without any reservations. The latter is always preferable when the sale has been put to bed. The check out may lead you to consider a different type of franchise than the one you first thought would be for you. This must be a match to work out well for the buyer, both financially and emotionally. A thorough study of the franchise and what it entails to own one is the only way to make a decision that you can live with. Check first before you write the check. Acquireo.com - Bill Henthorn Mon, 02 Jul 2007 12:35:26 GMT Franchise articles Franchise cost revealed http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/franchise-cost-revealed.aspx So you want to buy a franchise? How much will you need to pay to own a major franchise or one that is not very well known? The cost of a franchise can range from the low thousands to way over a million dollars. Why is there such a range of prices and do you get more when you buy one franchise versus another? The answer to the second question is yes. You do get far more when you purchase a major franchise. The difference goes from the success rate of a major franchise to the amount of training and help you will get during the entire time you own the franchise. The price range is a factor of what the market will bear and the popularity of the franchise. A major name franchise will cost more than one most people have never heard of. Another factor, which contributes to the cost, is the name recognition and the type of franchise. If the franchise is home based, the cost will be at the low end of the range. <h3> How to get a handle on potential cost </h3> There are many ways to find out the cost of franchises. You can attend a show and tell meeting put on by a franchise seller. You can read the local paper and business papers like the WSJ. You can contact business brokers and see what businesses they have listed and at what price range. A great new source for getting information is the Internet. A buyer can use any good search engine to find out just about anything you want to know about any franchise. Another way to get information is to speak with owners of the franchise you are interested in owning. Talk with more than one, and you will begin to get a picture of what that franchise needs in the way of capital. At the same time, it is a good time to ask if they would do it again and do the like the business. What are their pet peeves and what do they like about the franchise people. If you are lucky, you can get the unvarnished truth about that specific franchise and not from a seller of the franchise, but from an owner. The owner’s story will give you a better feel for the business than you will get from the franchise reps. A reputable business broker can be extremely helpful in your initial inquiry since they help people buy and sell all of the time. They are sales people, but good ones are also very straightforward and will answer questions with solid experienced answers. This is what you need and not the hype you will get from sellers. By checking various sources, the buyer will begin to form a very accurate picture of what that franchise is all about. If you like what you see, pursue it and if you don’t, you can just walk away from this idea with a minimum cost to your finances. <h3> Real cost and fluff cost</h3> Any franchise has a real cost and then they have the fluff cost. Added together, the buyer is presented with the total cost. Major franchises can get just about what they want from franchise buyers as they have a record of new owner success. They also provide extensive training and advice on an ongoing basis. This along with the great name recognition may account for their ability to help a new owner make it with a new business. They certainly defy the stats that new businesses have as to failure rate. Another key with them is they will turn down buyers who are trying to make it but are under capitalized. In the scheme of things they may be doing these buyers with a dream but little money a favor. The fluff cost is the money in the total that really is pure profit and really does not buy anything. Many low cost franchises have a high percentage of fluff cost. This is due to them spending little on the buyer after the purchase. They will probably supply a CD and a notebook with how to work the franchise, but they do not have to spend a lot more on further training. In many cases they are selling an idea at a very high price. A word of caution is to check out any low cost franchise very carefully. Contact other buyers of the franchise and if the seller is reluctant to introduce you to others, this is a red flag. Solid references are the norm when buying a good franchise. <h3>Does the franchise have a source for financing</h3> Financing a franchise is normal for many franchise buyers. They have a portion of the capital needed, but they will have to get help in raising the rest of the asking price. Most well run franchise companies have very strict criteria that buyers must meet before they will enter into serious discussions about a purchase. Part of this profile for the buyer is the capital they have available and can they get more if it is needed. The fact that the seller has criteria in place is another sign that they are looking for winners and not just someone they can make a buck off selling them a franchise. Sincerity by the seller in looking out for your future welfare is not a negative at all. They are well aware of what it takes to be successful and they have the experience to recognize it in a new buyer. If they do not see this potential they will probably pass on selling to the buyer. All of these elements go into the cost of a franchise. There are two schools of thought among franchise sellers. Here is the business, buy it and run it. Here is the business, buy it and we will help you to learn to run it correctly so that it adds to our successful franchises. The latter is the preferable franchise to deal with. Conclusions As you can see there are many ways to find out about the cost of buying a franchise. Once you have the total cost down, make sure you understand how this total was arrived at and what you get in return. Make sure you understand the upfront cost and the ongoing cost that come up every year. Ask lots of questions and get every thing in writing so you can study it on your own. Do not make any assumptions that have not been verified. If a policy is explained that is mandatory, walk away if you feel you cannot live with it after the sale. This policy will grate against you over time and become a constant irritant. Running a business is difficult enough without having a constant source of aggravation. Another given that can make a difference to the new owner, is decide early if you can live with the demands of the franchise you are considering buying. If you can see parts of it that you will not like doing, then be careful as once you are the owner, there may be no other choice for you. Know yourself and know the business is the answer to all of the questions that arise when buying a business. Acquireo.com - Bill Henthorn Mon, 02 Jul 2007 12:15:36 GMT Franchise articles Financing a franchise http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/financing-a-franchise.aspx So you want to buy a franchise. If you have all of the capital needed to make the purchase with some leftover to run the business then you do not have a problem. The potential owner with the desire to own a franchise, but is short of money is the person this article is directed too. They have the motivation, but they do not have the needed capital to pull off the purchase. There are several ways to solve this problem assuming the potential owner is of good character and has a solid credit rating. Franchises have been known to assist in the financing as they are always looking for people who can run the business well, but are in need of some start up money. They have sources that they deal with all of the time and this helps as they have a track record of success with picking good owners. They also may have contacts with investor groups who have capital. These groups are looking for a good place to get back a better than average return. <h3> Where can you find the money</h3> A house with a substantial equity may be a good place to start. A new loan could be written at a decent rate of interest and the money is found. Family and friends are the next source. Your bank may be a source if you have had a successful track record with them. Some insurance policies have very large cash value that can be borrowed against. A portfolio of stocks and bonds may make perfect collateral for a substantial loan. If your net worth is substantial you may be able to get a signature loan even though you do not have any ready cash. You can guarantee the loan to either the bank or the SBA. If none of these are available talk with the franchise people. They may have sources that you could never approach as you would never know about them. For them finding good potential owners is their biggest concern. If they start with good people, their program will help them become successful. <h3> Credit worthy owners and good managers</h3> These two attributes do not necessarily go together in the same person. Good credit may be an accident of birth or result from a frugal nature. Good managers are usually very people oriented and sensitive to what their people will respond to and how they can be motivated. As you can easily see, these two human circumstances are not always found in the same person. Franchise people know this so they will put the two together which will form the bases for a strong franchise. The money is there and the management is there. This may be a real partnership or just an investment by the money person. The franchiser will probably put the deal together. <h3> Loans to the owner</h3> Loans to the owner are almost always made to the business with the owner’s guarantee. Seldom can the business borrow on its own without the co-signing of the owner. This gives the lender two sources of recovery of the money if the deal goes south. This is true for a bank loan and also for an SBA loan. The lender wants to make sure that they have the chance to recover 100% no matter what happens in the future. <h3> Investor groups or individuals</h3> There are private investors that are looking for better returns that will buy into a franchise that will have a good manager running it. They do not want any of the day-to-day responsibility of running the business. They are just looking for a better than average return on their money. The franchiser usually has some of these people in his back pocket for a deal that he feels will do well as long as there is the money to back it at the start. If you are short of money, talk with the franchise people about helping you find an investor to help you get started. This is a negotiated arrangement so there are no rules other than it has to work for both parties. <h3> Using your home to finance the franchise</h3> This is done all of the time to raise the necessary funds to buy the franchise. There is some danger though, as the owner could fail and have to sell the home to repay the debt. If it is a sound business deal then it will probably work out okay, but the owner should consider what would happen if the business failed.Losing a home and a business at the same time could be a devastating blow to the owner. The positive aspects of this are the loan will probably have a very low rate of interest and can be paid back with ease when the business is up and running. The owner will also enjoy the freedom of no one looking over his shoulder on decisions he makes. Sometimes not having to answer to anyone is all it takes to get the business over the hump. Distractions like extra cooks in the kitchen can make a good deal hard to live with. Outside pressure can be such a distraction. <h3> Money from life insurance policies</h3> A loan on a life insurance policy does not have to be paid back at any certain rate or maybe not even at all. The loan would be deducted from any payment of a death benefit. This freedom of scheduled paybacks may make this kind of loan one of the best available if there is enough money in it to do the job. The best part of this loan is the lender cannot turn you down as you are really borrowing from yourself. Have your agent check it out for you and give you the details. It is a source that many people forget they have and overlook the possibility. Some times this along with family and other help is all that is needed to arrange for the needed money. Conclusions Once you have found the franchise of your dreams, the financing of the dream becomes a very real obstacle for some buyers. Ask for any advice and help the franchise people can provide. They face this problem on many deals each year, and they find solutions all of the time. Use them and their experience. The Internet list many companies that make these kinds of loans for the purchase of franchises. This is a very special lending market and you need to deal with people who understand it and can provide answers quickly. These lenders know the franchise market and they have a very good handle on who will be successful and who is a high risk. As in most business deals it is always better to deal with experts in the area you need help with. Private investors who have no interest in running the franchise are another way to get the needed funds. They will get an excellent return on their investment, but they deserve if as they are depending on you to make it work. A good manager and a good money person make powerful partners in a business. They each contribute from their strengths and together they have a better chance of success. Acquireo.com - Bill Henthorn Fri, 29 Jun 2007 18:40:02 GMT Franchise articles Locating franchises for sale http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/locating-franchises-for-sale.aspx Franchises are just a business under another name and a buyer can locate them the same way he would any other business. The sources for finding franchises that are up for sale are found on the Internet, in newspapers, through local business brokers, commercial brokers and major franchise offices. A potential buyer should try all of these available sources to get an idea of what is currently on the market. If a buyer has a specific franchise in mind, it would not hurt to ask similar franchises in the area if they know of any for sale. You could also contact the franchise directly and ask them if they know of any owners looking to sell. They may not introduce you, but they always have franchises up for sale. They may have exactly what you are looking for, or they may just keep you on file for a certain area of their region. <h3> The price range and the type of franchise</h3> Most buyers have a very good idea of the type of business they are interested in owning. The type of franchise will determine a price range that the buyer can consider in relation to what they can afford. The other factor is if you can find a franchise that is for sale in the area that you want to have a business. If not, is there a potential location that would be promising to start up a new franchise? If the buyer has no interest in starting a new franchise, then they will have to wait for one to come up for sale, change the area that they are interested in to one where there is a business for sale, or see if there is a similar franchise for sale. In some cases, the idea of owning a franchise and finding a deal just do not mesh at the time. If this is the case, the buyer should spend some time in the area that they are interested in and get to know the franchise owners in the area. Let it be known that you are in the market and maybe one of them will decide to sell. <h3>Coming up with a fair asking price</h3> The best part of buying an existing business is there are real records of income and expenses that can be investigated and used to develop a realistic price or worth of the franchise. If the business has been growing at a steady pace over time, the price can include some growth element but, depending on the franchise, there is a limit to what one franchise can do in total business. It is wise for any potential buyer to get expert help in looking into the finances of a business they are considering buying Expert evaluators can be hired or the buyer can use a CPA. The reason for doing this is these numbers could be used to gain financing or a business loan. The fact that the price was the result of the work of a disinterested creditable third party will help a lending institution decide whether the loan is reasonable in relation to the business’s value. Remember that most owners when selling will set the price higher so they have some room to negotiate. They will also have two real prices in mind. One will be a price for full cash out price and the other price would be if the old owner has to help with the financing and not get completely paid off when the business changes hands. <h3> If employees are involved</h3> If the business utilizes many employees, like a fast food franchise, the new owner should make sure that the key people are going to stay after the sale. The changeover period is critical and employee turnover at that time could have negative consequences. Having people who know the business inside out on the staff can help the new owner get started with their feet on the ground. If the old owner has a successful system in place to hire and fire employees, the new owner should at least look at it to see if there are parts of it that they can keep in place. The basic rule here is to not come in and make wholesale changes immediately. Let some time pass if the business is doing okay as it is currently being run. If there are problem areas, discuss them with the assistant managers or even the old owner if he is available for discussion. Keep the staff informed as to where you want to go and how you plan to get there. If they have suggestions, it is smart to listen closely as maybe their ideas are better suited to solving the problem you are trying to correct. Treat the old employees with respect and try to get them on your side as quickly as possible. Respect, trust, and fairness go a long way in keeping employee relations on a solid footing. <h3> Suppliers </h3> Franchises often have rules that restrict who an owner can buy supplies from. Many franchise owners has been frustrated by this part of the franchise contract. Since this is the case, the new owner should be very clear on what can be done and which purchases are controlled by the franchise contract. In any case, the old owner can supply the new owner with a list of suppliers that the business has a relationship with. This is important, as efficient supply programs are set up to order from established suppliers who deliver as promised and are less likely to cause problems for the business. Suppliers that can be counted on are critical to running a business that depends on timely deliveries with few mistakes. Failure here can become a nightmare very quickly for the franchise owner. Mistakes in supplies can hurt the company’s ability to deliver what they promise to their customers. This can have long-term consequences for the business. Visit the franchiselogix <a title= "View franchise suppliers here" href="http://www.franchiselogix.com/franchise-suppliers/">franchise supplier division </a> to learn more about franchise suppliers and their services. Conclusions Finding a business to buy is the first serious decision the buyer must make when buying franchise. A dedicated buyer will use all sources to find a deal they can live with and the time used is worth the investment. Once a franchise is located, the buyer should make sure all of the questions that need answers are both asked and answered. Facts and not assumptions are the grease that makes these deals come together. It never hurts to bring in expert advisers when looking for a business to buy. They may be able both to help in digging out a good prospective business and then to come up with a professional assessment of what it is worth using the numbers supplied by the current owner’s verified financials. As part of the deal, the buyer should become very aware of all aspects of the franchise contract and any restrictive rules that it may contain. Any supply restraints and advertising payments must be understood and figured into the business plan after the sale. Due diligence is the operative plan as the sale is hammered out and details are agreed to between the buyer and the seller. All of these steps are important elements of locating a franchise to purchase. Acquireo.com - Bill Henthorn Fri, 29 Jun 2007 15:58:01 GMT Franchise articles Franchise Buy a job or buy a business http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/franchise--buy-a-job-or-buy-a-business.aspx How can you make sure you buy a business, not a job? The last thing a buyer wants to do is to jump out of the job pan into the franchise fire. Without proper planning and serious investigation, the buyer can buy themselves a job with very long hours. They meant to buy a business, but they ended up with a job with excessive hours. The cause of this problem is the buyer did not do the homework to correctly understand the business and then plan for the personnel needed to cover the operating hours. In the poorly planned business the owner ends up captive to these uncovered hours. They have in fact bought themselves a job and not a business. <h3> Areas to investigate </h3> When considering buying a business, many potential business buyers are attracted to franchises. They believe that <a href="http://pyoo.com/businesses-for-sale-resources/business-buyer-articles/franchise-advantage.aspx">owning a well-known franchise will almost guarantee success.</a> This is not absolutely true, but it does have merit. A food franchise is the most likely business to snare the buyer into buying a job. These businesses always are employee-heavy and always fighting a turnover of personnel. When the employees are absent from work or just non-existent, the owner must step in and do the job. Owners of food franchises must have a very good staff to operate efficiently and without excessive hours on their part. This takes planning, training, and ongoing recruitment of employees. If this is not planned for and built into the budget, this can be a factor that will over time ruin the owners’ passion for their business. The most important area the potential owner needs to know about is the number of people needed to run the business correctly. The franchise people or the previous owner should be able to give very detailed facts and figures in this area. The new owner must make sure the cost of proper staffing is covered in the business plan. Poor planning here can have devastating long-term effects on running the business. <h3>Good employees and good staffing</h3> Food franchises are in need of well-trained employees who are reliable and do the job the way it should be done. A staff that is good at their job is a treasure to have. One that is unreliable and lacking in job skills will be a constant headache for the business owner. This is an area that the franchise should be able to give very good advice to the new owner and also help in the training program. If you are buying a new franchise, this is usually included as it is critical to success. Hiring and training of staff are very important elements of a food franchise. Training a good assistant is imperative if you ever want to have some time away from the business. With these elements in place, an owner can have days off and even take a vacation in the future. Without the personnel, the owner has bought a constant job with hours that will kill over time. When an owner has a good right hand person available to run the business, this will take a great deal of pressure off of the owner’s shoulders. <h3> Trading Bosses or buying a business</h3> Many franchise owners discover after they have purchased the franchise is that all they have really done is change from one boss to another boss. Many franchise operations are very restrictive and controlling as to what the owner can do when running the business. This includes setting hours of operation, who you can buy supplies from, where you can advertise and what you can advertise. The owner may discover that by contract, they have to participate in an ad that does not seem to work for their location. The answer to this complaint is to know what you are getting into before you turn over your money to the franchise seller. Make sure you understand all parts of the contract, including what you can and cannot do while running your business. A very smart idea is to speak with other franchise owners before making the purchase. Ask all types of questions including would you do it again or not. Find out what they like and do not like. Find out what their day-to-day business life is like and are their things about it that they wish were different. Listen carefully as to what they like and do not like. It is far better to hear the truth before purchase than after the money has been handed over to the seller. Surprises are likely to be in the favor of the seller and not in the favor of the buyer. Make your own judgment as to whether the restrictions on owners is something that seems fair or just another profit area for the franchise seller. <h3>Read about the pluses and minuses on the Internet</h3> The Internet covers almost all aspects of what a franchise owner is likely to experience after becoming an owner. This and other owners are the best places to find answers from parties other than the seller. This information can be studied and then put into questions to the seller you are dealing with on a franchise. Informed buyers will always make better decisions and also maybe better contracts when making the purchase. Knowing what to look for that is not in your favor helps to keep mistakes from occurring in the deal. Study the prices that other franchises go for and the rational for the prices. This will help ferret out puffed-up prices and numbers that are hard to justify by the seller. If the answers do not seem to make sense or are still fuzzy when answered, then the potential buyer can make a counteroffer or just walk away. There are good deals in the franchise business, but it is up to the buyer to find then with their own due diligence. Listen to the answers that are given, but then verify for your self. Conclusions There are many franchise offers that can be looked at by a potential buyer. The choice depends on the interest of the buyer. Be careful of buying a franchise that you have no passion for, as it will become a very big part of your life. It will help a great deal if you have a feeling for the business. There are large spreads in the prices of franchises for one solid reason. The price depends on what is included and if it is an existing business, how is it doing for the current owner? A high-profit business is certainly attractive if the price is fair in relation to the verified profit. If the staff is solid and the assistant managers are likely to stay, that is another big plus for the business. Ask tough questions of the current owner like, “Why are you selling?” and “How did you come up with the price that you are asking?” Listen to the answers and verify any numbers that are given as part of the answer. Have your own experts go over the figures just to make sure they are accurate and give a true picture of the business. Acquireo.com - Bill Henthorn Fri, 29 Jun 2007 15:44:52 GMT Franchise articles Franchise advantages http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/franchise-advantage.aspx Less money is needed to advertise a startup if it has a well-known image and is well thought of by the public. The standard sign will bring the traffic into the business. This is a huge advantage over opening a business with no preconceived feelings for it. A good location with lots of traffic will help to make any known franchise do well since the buying public knows what the company is about and what they offer. <h3>The franchise game plan</h3> All major national franchises have very good operating plans, which are incorporated in any startup of the franchise. This fixed structure is a tried and true model for success. It has been repeated over and over and tweaked to perfection. They know the traffic they need to make a go of the franchise and they are experts at locating the right place to put a franchise. They have worked out the training of new employees and an efficient way to supply the new franchise. They have worked out the appliances needed to make a fast food franchise work at top production with little loss of effort. A franchise like this can be replicated very easily and for some franchise owners this is exactly what they want. Others will feel constrained, but the success rate of these structured operations is hard to deny. The larger successful franchisors know what kind of person is likely to do well as a franchise owner and the amount of capital that is needed to gain success. Since they know the details that account for success, the potential franchise buyer would be wise to listen to these proven companies. If you have the money and the personality that they know is successful, then you should look very hard at one of these operations. <h3>Turning down potential franchise owners</h3> Franchisors have a vested interest in the continued success of newly added franchises. Since success is their goal, they will turn down buyers that do not meet their criteria. Usually this comes down to lack of money or the ability to raise the needed stake. If you are turned down, do not take it personally as they were probably doing you a favor by keeping you out of the business. If your funds are weak, this is usually the reason for the decline. They do want to sell franchises, but they also want to sell to owners they feel will succeed. Putting a maybe in a good location could present long-term problems if the business fails due to cash flow. The location may have been fine in the long term, but the weak owner could not last until the cash flow caught up. A failed business at the location can sour it for other potential owners. Due diligence by both parties works when buying a franchise. Each party should check out the other to see if it is a good fit. If both agree, then that is a sign that the deal should work and become another successful franchise. <h3> Since location is the name of the game</h3> Buyers would be smart to check out any proposed location for themselves and not just depend on what they are told. The location should be checked for possible road changes or adjacent businesses leaving the area. Major franchisors have experts on staff that finds their locations and these are usually solid. However it never hurts to check for yourself. The demographics of the area surrounding the location and the physical location are critical to the success of the business. Having a major franchise name is important, but it will not overcome picking a bad location. The statement, “He was a dummy, but he had a great location,” is true for many businesses. Where the business is in relation to its traffic can make or break the new franchise. <h3>Franchise advertising can help</h3> Major franchises can afford to buy substantial advertising over a specific territory that the single franchise owner could never afford. This is normally an advantage to the individual franchise owner. Major ad buys are designed to sell the name and not the individual locations. This bothers some owners, but in the long run it does help sell the franchise name. If the public has a good feeling for the franchise, it does help make the individual franchises better accepted. Local radio ads and TV are usually helpful to the individual locations. Mailed coupons that list the participating franchises are also very helpful. Coupons in neighborhood publications are usually bought by the franchise that this coupon ad would help. As with all other businesses, the repeating of ads does work over time. These ads keep bringing the name to the forefront. This constant reminder will capture some of the readers each time it runs. Advertising by local franchises is usually limited to mailed coupons or small ads in local newspapers. A local group can buy some TV and radio time. It is difficult for the individual business to spend that kind of money. Ads with specials seem to work better than any other type of ad. You see these often in the insert ads in the paper. The smart business owner sets aside an amount of money to promote the business during the year. This should be used for this purpose and spent each quarter as if it were the utility bill. Repeated advertising is the key to keeping the name in front of the buying public. Specials with expiration dates cause a sense of urgency and make the customer move on the offer. If also makes it easy to see if the ad was worth running. Conclusions A franchise, what’s in it for you? The first advantage is there is a high probability of success and therefore the fear of failure is overcome. The buyer feels confident that the investment will pay off if the franchise plan is followed. The fact that others have done what he is going to do and they now enjoy success is a comforting feeling to a new franchise owner. Ongoing training and seminars also help to get the new franchise owner up to snuff. These programs are the result of trial and error. The franchise people have tweaked the program to the point that it s very hard to fail if the plan is followed. Training on dealing with employees is very important, as this area is critical to growing the company. Employees that treat the customer right are an asset to the company. These employees are your company to the people they deal with and they must represent the company in the best way. This is a learnable skill and can be taught to the employees. All major franchises spend time on this element of the business. A good franchisor offers training in all aspects of running a successful franchise. The best ones have really good programs that make it very difficult to fail when followed as taught. Acquireo.com - Bill Henthorn Fri, 29 Jun 2007 15:35:51 GMT Franchise articles Franchise a family business http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/franchise-a-family-business.aspx <h3>A large family can supply needed employees</h3> A franchise that has many employees working in it on different shifts is one that a large family could run quite well if the family members are so inclined. The family must however get along with each other, as they will spend even more time together if they work in the business together. Sibling rivalries can become even more pronounced when the family members need to spend even more time together. If the family gets along well together then this franchise idea may be a perfect way for the business to solve the employee need. Another concern with using family members to work in the business is even the most harmonious families can be strained a little when they have to also spend their working hours together. Also if one of them is put in charge when the owner is not present, this must be explained and made clear that there can only be one boss running a shift. <h3> A natural selection for assistant manager </h3> If one of the family members is older and a natural leader of peers, then this person could be made the assistant manager or a shift supervisor. This has two advantages of letting the family member learn the business by running a part of it and being responsible of what happens when they are in charge. Some families have purchased a franchise in order to give a family member a job. In some cases it works and in some cases it is a disaster in the making. It comes down to whether the family member is capable of handling the job. Other family-run businesses decide early to let their children learn from people outside of the family and these businesses bring in outside managers and supervisors on purpose. Smart help that is not related can create an advantageous situation for the younger family members to learn from. The removal of inside family authority can open the way for a better learning scenario. Each situation must be judged on its own merits and handled with some care. Other employees can be affected if an incompetent family member is put in charge. This is a serious dilemma when it is done to good employees. They will resent the new boss and may leave when they become unhappy enough. Losing good employees over a bad decision like this can hurt the business in the long run. <h3>Advantages of paying family members</h3> When you give a family member money out of your pocket, you cannot deduct this money as a business expense. If you pay them to work in the business, this can be deducted like any other employee expense. The advantage to the owner is they get to use before-tax dollars to pay the family member. When it comes out of the pocket and is not a paycheck, this money is after-tax money for the owner. This tax advantage can be significant when larger sums of money are involved. This is a very good way to get money in the hands of a son or daughter without paying taxes on it yourself. <h3>Using the family franchise as a teaching tool</h3> A franchise that has family in key spots is a terrific way to teach how to run a business. This is true from both positive aspects as well as negative aspects. The family franchise can teach in real time all elements of running a business. First and foremost it teaches how to deal with all types of customers. It teaches how to handle employees and supervisors. Details like tax decisions can be explained as to the consequences. Staying with a budget and handling suppliers can be brought home to the family member the owner is trying to educate. The importance of proper advertising using radio, TV or newspapers can be demonstrated in real life situations and not as a textbook case. All of the things an owner has to worry about when running a successful business can be shown to the family member in great detail. This real time learning experience can have a positive affect in the life of the family member. If they stay with the business, the decisions are likely to be better and if they go out on their own, they have a better idea what to do and what not to do. Dealing with the day-to-day business decisions in real life is more likely to sink in than ideas read in a book. Being able to see the result brings home the correctness of the decision. If it works: why? And if it does not work: why? An analysis of the results can be illuminating to the trainee. <h3>Turning over the business </h3> Having a son or daughter in the business solves another problem that may come up in the future. Who will buy the business when the owner decides to sell? If the son or daughter likes the business and wants to continue it when the owner wants to retire, a natural progression is already in place. The son or daughter should be able to continue the success the owner enjoyed and not have to learn a new business. They already know what to do and how to do it. This built-in buyer helps in many ways such as long term planning and changes for growth. Making the business more successful makes sense when the son or daughter will be the beneficiary. Keeping it in the family is a very real incentive for most owners. Conclusions A franchise run by the family has many advantageous and some negatives. The employee problem is not as confining if there is help from the family. Management can be a family contribution or it can be kept outside of the family and used only to teach the family members and run the company. Most franchises that have family working in them gravitate toward having family in positions of power and decision-making. It must be made clear that a family member who is put in charge is the boss and other members working for this boss must do as told. This person must be listened to just as any other boss would be listened too. The owner must make this point in order to prevent normal family in-fighting from occurring. Sibling jealousy and disrespect cannot be allowed to take place in the business. If it shows up it must be stopped. The business comes first and all family members must be willing to recognize this fact. A family can run a franchise with great success if the head of the family lays down the rules at the beginning and makes sure they are followed. The advantages are many and the negatives can be handled when honestly confronted. Acquireo.com - Bill Henthorn Fri, 29 Jun 2007 15:26:56 GMT Franchise articles Buy Existing franchise vs start up franchise http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/buy-existing-franchise-vs-start-up-franchise.aspx The basic rule when thinking of owning any kind of business is the chances for success favor buying an existing business. There are pluses and minuses for either choice, but the statistics for success favor an existing business. The reasons become very obvious with a little study on the part of a potential buyer. The cost difference Is there a cost difference between the new franchise and buying an operating franchise? There can be quite a difference both ways depending on the financials of the existing franchise. If the business has good numbers and is showing a decent profit, it will be worth more than a franchise that is opened and started at a new location. The customer base has been started and, depending on the length of time the franchise has existed, the base could be significant and almost guarantee continued success. Location The location can contribute greatly to the cost, as location of a business that depends on walk-by or drive-by traffic is valuable. A new franchise may not have the same numbers of people going by. This lack of traffic will show up in sales over time. An easy way to view this principle is to think about a two-week fair. If it is well attended, the merchants will do better than if there is a low attendance. The same is true of a corner business with or without traffic. The low traffic will mean lower sales. These facts are a proven difference between two businesses that depend on people stopping by the business. Why is the owner selling? This element of a sale of an existing business is critical when talking of price for the business. If the owner is burned out and tired of the day-to-day running of the franchise, it may be possible to buy a good business at a bargain price. Some owners will sacrifice some money just to get rid of the business. If they are really ready to leave, this can work in the favor of the buyer. Money talks and a cash offer with no strings may be all it takes to pick up a good business at a bargain price. An estate sale or a sale that is brought on by divorce may also offer the potential to buy the business for a very good price in relation to what it is really worth. Hire an expert business evaluator and see what value they come up with compared to the asking price. If there is a significant difference in your favor and you can afford the price, seriously consider making the deal. Existing traffic and road changes Make it a point to see if there are likely to be any street changes or surrounding business changes that will affect the traffic that supports the business. This factor alone can make a huge difference in considering the purchase or not. Do not get surprised in this way as you can see the business die due to lack of traffic. This is not something you want to learn about after the purchase. If the business is in a shopping center, make sure that the anchor stores are staying, as they supply the traffic for all of the businesses in the center. An active grocery store is always a good traffic builder for the other businesses in the shopping center. If the business is in a rented property, make sure that the lease can be assumed or negotiated with favorable terms. If the business includes a building, make sure that you have the building inspected for possible repairs that may be needed. Again do not get surprised after the purchase. Can all existing franchises be bought? The answer to this question is it depends on the buy-back agreement the owner has with the franchiser. It may also depend on a clause called the right of first refusal. This clause gives the franchiser the right to meet the offer of any buyer. So the answer is it depends on the agreement the old owner has in his contract of purchase when the purchase was made with the franchise company. These terms can have a direct effect With these possible restrictions, the franchise owner may want to sell, but the contract roadblocks may be too difficult to overcome except by selling it back to the franchise company. The reason for these buyback contract restrictions is the franchise company wants to control who owns a franchise Their contract rules may be so restrictive that the old owner has no choice. Can a franchise contract be negotiated? In most cases there is very little that the franchise company will negotiate since they do not want to lose control or cause problems with their other franchise owners. The more successful the franchise is, the less negotiating room there is likely to be in the purchase contract. They just do not have to make concessions to potential owners, as they can get whatever they need without doing any negotiating. If there were some room for negotiating, a potential buyer would be wise to see what the other owners of franchises were able to finalize in their contracts. At least you know what was available in the past between the buyers and the franchise people. Knowing what was possible is absolutely an advantage to the negotiation of contracts between the buyer and the franchise company. If the deal comes down to something that you could not live with, walk away and try finding a different business venue. After all there are hundreds of franchises available to the people who want to own a business. Ask your questions and listen closely to the answers. If an agreement is drawn up, make sure you have it looked at by a good business attorney. Do not assume any thing that is not in writing and in detail if it is important to your decision. Conclusions All business purchases should be studied and broken down into a plus-and-minus analysis. When the list is down to a few, then a clear-eyed comparison should be made between the business opportunities. Ask yourself: do you have enough capital to make sure you are successful? Do you need to have a stellar beginning that may not happen? Is your business plan realistic or filled with best-case scenarios? If there are too many ifs in your plan, then it better be looked at again and revised. Analysis of an existing business and ways to make it grow or become more efficient are critical to continued success. Getting answers to all of your questions and having the answers verified are steps that need to be taken seriously. Assumptions are for fools and lazy buyers. Do not be either, as it will cost you later. There are never any dumb questions. There are just dummies who do not ask the questions. Buying a business right is hard work. It is just part of the pathway to success for you as a businessperson. Verification of all answers is the secret to buying a business and keeping surprises to a minimum. Acquireo.com - Bill Henthorn Fri, 29 Jun 2007 13:25:58 GMT Franchise articles 2006 Franchise Trends http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/2006-franchise-trends.aspx Lots of jaded corporate employees today stand ready to put their skills to use to profit themselves instead of their employers. Add to that a newer generation of future business owners, known as the "active" Baby Boomers, who aren't quite ready or able to retire. A large portion of these people are finding outlets for their skills and retirement time by turning to a $1.5 trillion dollar industry, the franchised business. That, according to The International Franchise Association (IFA), is the annual retail sales figure which franchising produces – 40 percent of all US retail sales – from roughly 760,000 franchised small businesses in more than 75 different industries across the United States. Franchising employs an estimated 18 million, and a new franchise opens its doors every eight minutes. 2006 looks to be another strong year in the franchise industry, with several categories being especially robust. Baby Boomers will play a major role in the growth of franchising. The oldest boomers will be turning 60 in 2006, according to the Social Security Administration. Over the next three decades, 76 million Baby Boomers will reach retirement age, says the U.S. Census Bureau. Who are they? Described as DINKs (Double Income No Kids), they're generally active and healthy, and won't settle into a retirement passively watching time go by. Instead, they'll want to make a difference in others' lives, and one way to do this is to get into their own businesses, for a number of reasons. They may want to help their children and grandchildren experience business ownership, becoming active investors. Or, they may want to add to their existing income and build equity for themselves. Here are some categories expected to heat up in 2006: Fitness and weight loss franchises The fitness and weight loss categories experienced significant growth last year, and all signs indicate no slowdown. Obesity and diabetes remain still prevalent issues that affect the industry. The strength in these categories – unlike hot diets of the past few years – is not a fad. With the US Government releasing new "food pyramids," more people realize that balanced diets and moderate exercise are the "prescription" for the great and consistent results they want. Compare this to the Low Carb, West Coast, South Florida diets and others, which may bring fast results, but are not proving to be long-term solutions for most. Two womens-only express workout franchises, Shape Express, and Slim and Tone, are two that have experienced rapid growth. Men are not being left out, with newer mens-only concepts like Personal Training Institute (which offers one-on-one nutritional counseling) and Cut's Fitness For Men. Business Service franchises These franchise concepts help small businesses outsource their needs for everything from signage to IT services. With small businesses driving our nation's economy, franchises that provide services and products to help them grow are crucial and always in demand. Franchise companies like Sparkling Image, which provides sanitization of commercial and public restrooms, may not seem like the most glamorous opportunity, but they address both the huge general public concern about health and the specific need that businesses have to provide clean facilities in order to ensure repeat business. All businesses need products like signs and banners to advertise, and a company like Signs by Tomorrow has franchises nationwide that produce and design those much-needed products. As internet shopping experiences grow more positive, online purchases grow in sales volume. Some customers are even becoming "sellers" of items in their homes, etc. PostNet handles shipping, packaging, copying, and printing, all services that are used daily by both consumers and businesses. Postnet has grown well beyond 1,000 franchised locations, and is now expanding internationally. <center> article continues below <script language=JavaScript src=http://adserver.acquireo.com/abm.asp?z=15></script> </center> Home Improvement franchises The strong housing market is driving growth in home improvement. According to Standard &amp; Poor's semi-annual survey of the household durables industry, published in October 2005, "the demand for household appliances and home furnishings is rising steadily in step with a strong housing market and the trend is likely to continue." Some franchises will continue growing with these trends. These include V2K Window Coverings, which helps homeowners to update their older homes or decorate their newly built or bought ones. Outdoor Lighting Perspectives adds dramatic outdoor lighting effects to homes, while DOTI (Designs of The Interior) provides beautiful custom decorating ideas and furniture to beautify living spaces. Basic Consumer Service franchises Dual-income families with no time (DIFWNT) is a continually growing demographic for two decades. For working couples with children, weekdays can be adventurous, and after-school soccer practices, musical instrument lessons, and doctor's appointments can eat up time needed for household duties. Molly Maids is one franchise that offers residential cleaning services to help relieve some of the everyday stresses of running a busy household. A new generation of adults has entered the scene, and they are not skilled in fixing things around the house or installing extra phone jacks. Mr. Handyman is one of several household repair franchises that are thriving. They sold 60 new franchises in 2005, and are up to 190 nationwide. HR Staffing and Consulting franchises According to The American Staffing Association, contract and temporary staffing services had combined sales of $16.9 billion in the second quarter of 2005. First, a growing shortage of skilled workers is helping fuel the growth of franchises like Express Personnel, with over 500 locations worldwide. Second, there's a growing labor pool of older workers who still want to work and can add value to a company. A 2003 AARP-Roper survey revealed that this trend is expected to keep growing, and states that 55 percent of retirees would like to work part-time for either income or enjoyment. As a bonus for employers, older workers can usually move through training programs faster, adding efficiency to management. Unique and New Niche businesses franchises Entrepreneurs create new ideas and new niches almost daily, by entrepreneurs. Filta Fry has specially equipped vans that filter cooking oils for restaurants, helping to improve taste for their diners. Drive-N-Style offers automobile interior customization such as wood trimmed dashboards and custom leather seats, and exterior customization such as chrome accessories, and "ground effects." Finally, a new industry called "sports enhancement" is evolving, with High Intensity Training Centers franchise leading the way. Started in 2000, "HIT" Centers offer workout programs for athletes of all ages who want to speed up their strength training for sporting activities. If you're a prospective franchise owner, continually monitor trends to find franchise opportunities that will provide you with years of prosperity. "Hot" franchises tend to come and go, but trends last longer. The trick? Get involved early enough to get the territory/location you want – one with the largest growth potential. "Equity" should be one of the most important words you remember during your investigation and decision process. Acquireo.com - Joel Libava Thu, 14 Jun 2007 12:36:49 GMT Franchise articles 7 Essential Steps - Financing your new Franchise http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/7-essential-steps-financing-your-new-franchise.aspx <ol> <li>Make sure you have a formal business plan. If necessary, get the help of a CPA or other financial expert – and don't forget about your local small business development centers.</li> <li>Approach lenders you know: including your personal bank. You already have a financial relationship with them. See if they are eager to help you with lending options. And check if they're an SBA Preferred Lender.</li> <li>Complete your loan paperwork thoroughly. Include lots of detail. If you are not detailed enough in your application, your lender might feel you are not detailed enough to actually run your business.</li> <li>Be realistic – even conservative – in your income projections. If you end up doing better, fantastic!</li> <li>What if you were being asked for a loan? Would you loan money to you for this business? This helps you "sell" the plan to your lender.</li> <li>Keep on keeping on. Many get turned down on their first loan request. See what you did and to see what you missed. Work with a financial professional and submit your application elsewhere.</li> <li>Be easy on yourself. You're in a learning experience, and your patience is a great virtue at this stage in your business start-up.</li> </ol> Acquireo.com - Joel Libava Thu, 14 Jun 2007 12:35:19 GMT Franchise articles 10 tips for investing in a franchise http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/10-tips-for-investing-in-a-franchise.aspx With more than 3,000 options in the world of franchising, these tips are great for you starting the process. Remember, knowledge is power! <ol> <li>Start by looking at your own business skills. Are you great at sales and marketing, or better at operations? Are you a manager of people, or prefer having no employees?</li> <li>Are you comfortable using someone else's systems and procedures? Remember that franchising is a license that you purchase to have the right to use the system. Don't invest in a franchise, if you won't use the system. Start an independent business instead.</li> <li>Does your family support your decision? Starting any business is a family decision. Your family must that your business will affect time available for time, and you will need their support.</li> <li>Complete your net worth statement. How? Subtract all your liabilities from your assets; that's your net worth. Your lender requires a down payment; don't forget your own living expenses during your startup period. Set aside enough for 6 to twelve months, while your business ramps up.</li> <li>Talk with franchisees. When you find some interesting franchises, visit and talk with as many franchise owners you can in those systems. Are you like them? Are they glad they chose their particular franchise system? Would they do it again?</li> <li>Take time during your research. Be thorough, don't rush, and talk to both happy and unhappy franchise owners. Discuss what you're hearing with the franchise company's representative. See how they react to your questions.</li> <li>Read through the Uniform Franchise Offering Circular (UFOC). The franchise company will send you this required legal document. Take note and write your questions down as you review it, so you can ask the franchise company representative.</li> <li>When you have decided on one opportunity, visit the franchise company's headquarters. Meet the executive and support teams in person: they are your potential business partners. And remember that a good franchise company is also checking you out. They want the right people for their franchise.</li> <li>After you return from your visit, check your notes to see if you have covered everything. If so, have an attorney familiar with franchise law look over the franchise documents. The attorney should point out things you may have missed, and explain both party's legal obligations. Also have a CPA help you decide on a business structure for your company, if you decide to move forward, and go over financial information.</li> <li>Make your final decision: gut check time. You've finished collecting data. You've met franchise owners. You've visited company headquarters. Now: does this opportunity "feel" right? If so, move forward. If it does not feel right, don't do it. There will be other opportunities. Really.</li> </ol> Acquireo.com - Joel Libava Thu, 14 Jun 2007 12:34:09 GMT Franchise articles Franchises - Things To Consider http://www.acquireo.com/businesses-for-sale-resources/franchise-articles/Franchises-things-to-consider.aspx The franchise concept is an incredible one. Gather all of the ingredients specific to a business and formulate a recipe that can be duplicated over and over again by anybody. When someone refers to a "turn key" operation, the most likely example is a properly orchestrated franchise. Although the recipe has been set, it still requires the input and management of the right owner to ensure an individual location is successful. The Bad News: A franchise is by no means a guarantee of success. Plus, a new franchise is basically a start up with some advantages. Master Franchisers will do a load of demographic and marketing studies evaluating potential customer base, drive by traffic. etc., but the only thing that they cannot do is guarantee your success nor will they document any specific revenues or profits. They usually have very slick salespeople and presentation materials but so what? It's really just an educated guess about what "may" happen. When all is said and done, new franchises are to a certain extent, a "build it and pray they will come" strategy. Plus, a new franchise can sometimes mean waiting a year or more for it to be launched. <center> article continues below <script language=JavaScript src=http://adserver.acquireo.com/abm.asp?z=15></script> </center> The Good News: Franchises can be a good place to begin your entrepreneurial career. If you want to greatly improve your chances of success then buy a franchise resale. Take advantage of one that's already established and successful. This way, you combine the best worlds's of a franchise concept, and the track record of an existing business. It just makes more sense. While it is not always easy to locate resales, there are plenty of them around. The best way to find one is to address your search on two levels: call the Master Franchisers and ask if they can provide you with a resale listing in your area. Second, approach any current owner and ask him/her if they know of any that may be for sale. They will probably tell you that theirs is "for the right" price. In either case, you will get leads to pursue. Of course, you can always go through regular channels such as your local paper, business brokers and online listings. The other good part of buying an existing franchise is that you can implement all of the same strategies for identifying, negotiating and financing the purchase as you would when buying an existing non-franchised business. As such, it's wise for you to get hold of a good strategy guide for buying an existing business. The Investigation Advantage With A Franchise Probably the most attractive feature of buying a franchise from the buyer's point of you is that you can investigate any franchise much easier than an existing non-franchised business. The reason for this is because you will be able to look at other franchises under the same banner. You can speak with other franchisees in your area and they will be a wealth of information for you. There is also a disadvantage when investigating and conducting Due Diligence on a franchise as you have to do it on two fronts. You have to check out the business itself of course but of equal or greater importance you have to evaluate the Master Franchiser to be sure that they will deliver everything they are supposed to do. Your Partner is Your Competitor The Master Franchiser's agenda is to open up as many locations as possible. While they may all say that they will not dilute the market, rest assured that unless they are contractually obligated to do otherwise they will keep compacting the territory. As they open more and more locations you may wind up competing with your own brand. Once a customer of yours finds another location to be more convenient unless you have a rock solid relationship with that individual you will lose their business. How To Make Money in Franchising The best way to accumulate wealth in franchising is to keep opening up or buying other locations. If you can, stick with one banner or within an affiliated group of companies. This way, your leverage with the Master Franchiser increases and you can also focus on running one particular type of business. You can't dance at all of the weddings so opening up new locations too quickly can cause growth problems. However, as soon as you get the first one on track, look to acquire another one. Franchise Contracts Each state has different laws related to franchises that are usually quite intricate. Additionally, the agreements between the franchisee and franchiser differ between companies and many contain clauses that you would never even think exist. As an example, if a franchisee wants to sell their business, most often the franchiser has the first right to buy the business. The reasoning is that they want to be sure that the market doesn't have too many resales available (it hurts them when trying to sell new ones if potentials buyers see too many other franchisees selling). Secondly, they want to protect themselves if they don't feel the potential buyer is right. Hire an attorney who specializes in franchise law and before you take a second step with any resale franchise, get a copy of the contract between the franchisee and franchiser to properly evaluate what you will be faced with along the road. In Summary: Franchises can be ideal for many people. If you want really improve your success rate, then buy an existing location. It will provide you with all of the benefits of a franchise along with the added security of historical data and a proven track record. Acquireo.com - Richard Parker Wed, 13 Jun 2007 19:26:34 GMT Franchise articles Powered by Acquireo.com http://www.acquireo.com Businesses for Sale - buy - sell - find a business today! acquireo.com Tue, 13 May 2008 14:44:35 GMT Businesses for sale