Edmonton Accounting Firm | Are All Franchise Opportunities The Same
When people are deciding on whether they want to become a business owner or not says Edmonton accounting firm. They often look at purchasing a franchise as an easy way into business ownership.
And while franchises can be very beneficial. With a smaller percentage of franchises failing in a five-year period, then other small businesses. People need to consider why franchises are more successful. When they make this decision on whether or not to buy a franchise.
The first thing that they should do, is if they are thinking about buying a franchise. Is comparing two or three franchises opportunities at the same time. Because it can help them be objective.
The reason why can help them be objective. Is because they will be able to see the differences in the franchises side-by-side. From franchising fee, to royalty fees. And what is included in the franchise, such as systems and processes, website, or advertising opportunities.
And when they are looking at the information objectively. It is important that they do so with an Edmonton accounting firm. Because they can help look at the financial information. Such as royalties compared to revenue.
And read the franchise agreement. To see if there are any extra hidden costs. Such as a mandatory television advertising clause. That might make a great opportunity look less fantastic, because of additional fees that are not as obvious upfront.
The next thing that business owners should do. Is look at the financial information. Such as the year-end finances, as prepared by their accountant. For a wide variety of locations.
While the franchise might be happy giving financials for their best locations. And that can be very beneficial for future entrepreneurs to be able to see what their potential earnings could be.
They also need to see what is more likely in terms of what they are likely to get per month, or per year from the business if they owned it. At least as they are growing their business.
There Edmonton accounting firm will be able to look at things such as what the royalty payments look like compared to the monthly and yearly financials. And even look at things like rent, common area charges, and utilities. To see if this is a viable business especially when considering the franchise and royalty fees.
Also, they will also be able to look to see if the payroll numbers include the business owner’s time. And often, the business owner’s time is not fairly accounted for in the payroll information.
So if the business owner was working a significant amount of time in the business, and not getting paid for it. It might not make it a viable opportunity for other business owners. Unless they are willing to put in their own time for free in order to make it work.
Should understand all of this information before deciding whether they want to buy a franchise or not. And the sooner they can understand this, the sooner they can avoid making a decision that is least beneficial for them.
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While a lot of people are drawn to franchises says Edmonton accounting firm. Because they are very excited at owning a business that already has a known brand. As well as products and services that people are already familiar with.
However, the true value of a franchise comes from the systems and processes. That can help a business owner know exactly what they need to do every step in the business. In order to duplicate the success of other franchise owners.
However, if a person is looking at a franchise opportunity. And they have a lot of gaps in the systems and processes. It may not be the best opportunity for people. Will then have to figure out how to run this business that they own. That while it might have a recognizable name, it does not help a business owner duplicate the success.
This is why it is very beneficial for entrepreneurs to look at franchise opportunities side-by-side. So that they can compare them. And be able to look at the opportunities objectively. This way, they will be able to see easier, if the opportunity they thought was fantastic comes with less than other franchises.
The next thing that business owners can do. Is hire and Edmonton accounting firm to help them look objectively at the business opportunities. Especially when it comes to looking at the franchise fee, and royalty fees.
The thing that people should keep in mind. Is that the person who is selling the franchise seem like a business advisor. They are actually a paid salesperson. Who gets paid to sell the franchise. And while they are very knowledgeable in business, they are going to be working in their best interest.
Therefore, in order to have someone on their side, people should hire Edmonton accounting firm. Because they will help the entrepreneur look very objectively at the information. In order to make a decision that is in their own best interest.
This way, business owners can also avoid succumbing to the sense of urgency that the person selling the franchise is creating. And while they might say that if a person does not act fast, that this opportunity is going to go away.
People need to understand that this is simply a sales tactic. Designed to give business owners to make a decision quicker, and without considering all of the information first. By working with Edmonton accounting firm. Business owners can have that person on their side, helping them avoid making a quick decision.
What they should be asking for, is accountant prepared financials. For a variety of locations. And while the franchise might be happy sending them financials for their best locations. Business owners should look at the financials for a wider variety of locations.
That way, they can get an idea of the average revenue that they could expect to earn. Instead of just knowing what is the best potential could be. By knowing that, can help them make the decision on whether this is franchise they would like to own, or if they should continue looking for opportunities.