Steps to Buying a Franchise vs Buying a Small Business

Written By Steps To Faculty Published September 18th, 2010

Buying a franchise can be a tempting opportunity. A franchise offers prospective franchisees the option to involve themselves with an established company, a proven product, and a good support system. However, buying a franchise is much different than buying a small business. You will need to think carefully in order to determine the perfect fit for you.

Step 1. Determine whether you are a good fit.

Becoming a franchisee is not for everyone. Although buying a franchise can be a good way to start a business, and is certainly less risky than buying a small business, some people will never feel comfortable operating under those conditions. Different franchisers expect different things from their franchisees. Decide what you are comfortable with, and then try to find the perfect match.

Step 2. Assess your abilities

Analyze your abilities in order to find your perfect fit. Do you have prior business or management experience? Do you have technical experience in fields such as auto repair, tax preparation, or home decoration? If you do not have experience, can you learn quickly? The answers to these questions should be a key part of your decision.

Step 3. Determine your goals

Figure out why you want to own a franchise and what you hope to gain. Think about how much you want to earn, what types of goods or services you want to sell, how much you want to work, whether you want to manage the franchise yourself, and whether or not this is part of your long-term plans.

Step 4. Determine how much you can invest.

Buying a franchise is easier than buying a small business in many respects. However, there will still be a significant up-front investment. You will need to figure out how much you can invest and whether you will need financing. It may help to purchase the franchise with a partner if you need financial assistance.

Step 5. Attend a franchise exposition

Once you know what you are looking for, it is time to find the franchise that best meets your needs. A franchise exposition will let you talk to many different franchise exhibitors, compare benefits, and find a franchise opportunity that appeals to you. Be sure to ask how long a franchiser has been in business, how many stores it has and where, what the franchise fee is, and what restrictions may be imposed on you.

If you have not been able to find the perfect franchise opportunity, try a franchise broker. A broker can take a look at your interests, goals, and financial situation to determine which franchise best fits your needs. Be aware that many brokers have a limited selection of franchisers and may misrepresent earning potential. The best idea is to talk with current and former members of the franchiser in question. Ideally, at this point you will know whether buying a franchise or buying a small business is the right choice for you. Please visit stepsto.com for more great business advice.


Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.