Edmonton Accounting Firm | How To Compare Franchises
Often, Edmonton accounting firm hears from people who have an opportunity to purchase franchises. And they believe it is an opportunity to good to refuse. And want the accountant to help them make the purchase.
However, before people jump into buying a franchise. They need to know how to ensure that this is the best decision for them. Therefore, they should keep several things in mind when they are purchasing a franchise. To ensure they can make the best purchase possible.
One of the first things that they are going to do, is look at several different opportunities at the same time. Even though one might look like an opportunity they cannot refuse. Or is in an industry that they absolutely love. The reason they should look at multiple opportunities.
Is so that they can compare what is involved in each of the franchises objectively. And so that they can see what a variety of franchises offer for the franchise fee, as well as the royalty payments.
The first thing that people are going to see says Edmonton accounting firm. Is that each opportunity is going to come with a specific franchise fee. Often, the more well-known the business is, the larger the franchise fee will be. And this is simply to buy the franchise system.
This is the name, and any systems or processes that are included in the business. And the value of the franchise. Is not in the name that may be very well-known. But the value is in the systems and processes that come with it.
For example, people should look at the restaurant McDonald’s as an example. From hiring staff, to training that staff, and retaining them. As well as the preparation, cooking and serving of food. There is a system and process for everything.
Less people would by McDonald’s, if all they got was a name, and a list of laces that they could buy the supplies and ingredients from. And then are told to just figure it out. People want to purchase a system that is easy to learn, and easy to follow to be successful.
Therefore, if they are looking at multiple franchise opportunities together. They might see that some franchises are extremely lacking in they processes that come with the business. Which may cause some people to reconsider the opportunity.
When they ask Edmonton accounting firm to help them compare franchises. The first thing that their accountant will ask, is to see accountant prepared financials. And while the franchise may be more than happy to supply that for their best location.
People should be prepared to ask for financial information for any location the request. So that they along with their Edmonton accounting firm can figure out what the average revenue that they can expect if they purchase franchise.
Rather than seeing the best locations, and thinking that that is an average. But instead, that is the best of what they can expect. And then get disappointed when they do not get the same results.
Comparing franchises is very important. To ensure that whichever franchise people purchase, will be the right one for them specifically their life, and what they are hoping to accomplish.
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Many people think that purchasing a franchise is an easy way into business ownership says Edmonton accounting firm. And while no matter how a person becomes an entrepreneur. It all takes a lot of work and a lot of time.
But the statistics do support that franchises have a higher success rate. According to industry Canada, 15% of small business owners in Canada fail in their first year. And 30% of small business owners fail in their second year of business ownership.
Half of all small business owners that start a small business in Canada will fail by their fifth year in business. But some statistics show that only 14% of franchises go out of business within the same amount of time.
And while many people equate this to franchises being more successful. Entrepreneurs should keep in mind what is likely to make them more successful, is the fact that they come with processes and systems built in.
While small business owners have to create those processes and systems themselves. Which they often do not do. And this can be the difference between why franchises have a lower failure rate. And it is not necessarily because they have better chance of succeeding.
These systems and processes make it very easy for people to follow path. That has proven to be successful for other business owners. And that is where the value of the franchise comes in. They have figured out what to do in order to be successful.
And have included those instructions in the purchase of the franchise, in the form of a franchise fee. So that other people can purchase the system, and follow it. In order to find same levels of success.
However, Edmonton accounting firm says if people are looking at one franchise opportunity. And see that there are not as many systems or processes than they expect. This could be an indication that this is a franchise that is not in their best interest to purchase.
And while some business owners want to change a lot of the systems and processes in a franchise. Because they think that they know a better way of doing it. Edmonton accounting firm says it is far more beneficial for entrepreneurs to simply start their own business from scratch.
Rather than paying a franchise fee, as well as royalty fees in order to purchase a system that there not going to follow. It is going to be less expensive to start a new business, and work extremely hard. Then to purchase a franchise they are not going to use.
While many people are driven to become a business owner. And buying a franchise can see like a fast and easy way to do this. Being a business owner is hard work, no matter what kind of business they own. And business owners should understand this before they jump into any business owner.