Edmonton Accounting Firm | Buying A Franchise
There many reasons why people are attracted to the idea of buying a franchise according to Edmonton accounting firm. Not only because franchises have a lower failure rate than other small businesses in Canada.
But also, when people by franchises, they are buying a brand that people are familiar with. And a business that already has a built in customer base. That have a proven marketing program already created.
In addition to that, business owners who purchase a franchise. Will have systems and processes in place. That can help them do any of the things they need in their business. From preparing the products, to serving customers, and even hiring, firing and cleaning up.
These can be so valuable. That helps business owners hit the ground running as soon as they get their franchise. That can help them be more successful sooner in their business than people without a franchise.
However, there are many things that people need to keep in mind when they are purchasing a franchise. To keep them from buying a business that is not viable. Even though it is a well-known name.
One of the first things that business owners should do when they are considering buying franchises. Is contacting their Edmonton accounting firm. And asking them for help.
Their accountant will be able to look at the information objectively. And help the business owner decipher the financial information. In order to make the best decision for the business owner themselves.
This is incredibly important, because while the person that they are talking to about purchasing the franchise may seem like a business advisor. They are actually a salesperson. That gets paid for every franchise they sell.
So they are not working in the best interest of the business owner. But working in their own best interest. Often creating a false sense of urgency. To encourage people to make snap decisions without looking at all of the facts.
This is why hiring an accounting firm can be so beneficial. From looking at information that is often overlooked, such as reading the franchise agreement, applying royalty against revenue. And looking at individual lease agreements, common area charges and utilities.
Their Edmonton accounting firm will also look at the payroll, to ensure that a business owner can earn a fair wage while working in the business. Or if this is not going to be something that they will be able to do for quite some time.
It can also help a business owner figure out if it is worthwhile to pay the franchise fee, and ongoing royalties on a monthly basis to the business. Or if they are farther ahead to simply open the doors to their own business.
When they are doing this, it is recommended that business owners compare two or three franchises side-by-side. So that they will be able to make the best comparison. That will help them be objective in their decisions. And whether the franchise that they are interested in is truly the best decision for them.
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It is very important for business owners who are considering purchasing a franchise to hire their Edmonton accounting firm. In order to help them make the most objective decision possible.
Even opportunities that seem extremely good. May not be as good as they think. Once there accounting firm looks at all the financial information.
And while the franchise that they are looking at is going to be more than happy to provide them with plain paper financial information. From some franchise locations. People need to consider why they have given the financials for those locations.
And the likely answer. Is that these of the most successful locations. However, if a business owner truly wants to be objective. They should ask for financials from other locations. In order to get the picture of what average locations are going to do financially.
And when they are asking for this financial information. Edmonton accounting firm recommends asking for accountant prepared financials. Because they will be more accurate as well as more complete information.
Once business owners have the accountant prepared financials for several locations. Over and above the locations that the franchise initially provided. There accountant will be able to look through that information and truly understand the financials.
This will allow them to look over to see if the royalty that they are going to be expected to pay is same for every location. As well as if the franchise fees are different from location to location.
And it will also help their Edmonton accounting firm figure out if the owners are likely going to get a fair wage for the work that they put into their business.
And while business owners typically will have to put a lot of hard work into their business without getting paid initially. If this is a long-term plan, it is not going to be beneficial for the business owner in the long run.
In fact, it is one of the most important things to consider. And one of the things that is most often misrepresented in the financial information that a franchise gives a potential owner.
For example, one franchise owner might have their spouse and their two kids working for free in the business. Which will end up making the financials look far better than they would if all staff got a fair wage.
By looking at several different franchises side-by-side. Business owners can figure out which one is the most beneficial for them. So that they can decide which when they would like to buy, if any.
And after looking at each of the opportunities. Many business owners may decide that a franchise not the right system for them, and they are still inspired to become business owners. But to do so without the cost of the franchise fee or the royalties that they have to end up paying.
Rather than making this snap decision, business owners should slow down, get all of the information that they can. And then get help from their Edmonton accounting firm. To help them make the right decision.