Edmonton Accounting Firm | The Benefits Of Purchasing A Franchise
There are many things to consider when looking at franchise opportunities says Edmonton accounting firm. And anyone who is thinking about purchasing a franchise. Should become very knowledgeable about franchises. In order to make the best decision possible.
One of the first things that business owners need to do. Is ensures that they have someone on their side. That can help them look at the information objectively. Because while they are going to have the person who is selling the franchise. Acting as a business advisor.
Will need to keep in mind that those are paid, salespeople. Who benefits whenever they sell a franchise. Which is why they should have an objective viewpoint. And somebody else helping them understand the information. And can also keep them from being pressured into making a decision quickly.
Often, the people selling the franchise create a false sense of urgency. In order to get people to make decisions quickly. Or as a reason why they cannot get good information such as accountant prepared financials for multiple locations. Instead of plain paper financials from their best locations.
This is why it is important to contact an Edmonton accounting firm. To help people understand the information that is being given to them by the franchise. And to look into the business, in order to determine if it is a great opportunity for them or not.
One of the first things that people need to do, is looking at the franchise systems and processes. That comes with the franchise. Because while many people think the value is in the name, or the products and services. The value of the franchises actually in the systems and processes that they have created.
For example, people do not want to buy a McDonald’s franchise because of the fantastic quality of workers in French fries. And while the food is delicious, and there are a lot of people who prefer it over other fast food.
The true value of a McDonald’s business is the fact that they know how to do all aspects of the business extremely well. And have created easy to follow systems and processes. For every aspect of the business. From recruiting and onboarding staff. To preparing the food and serving it to the customer.
And everything in between. Therefore, if when people are looking at the systems and processes that come with the franchise opportunities that they are looking at.
And they are not satisfied with the completeness of these systems. It may not be the best opportunity for them. And by comparing multiple franchises at the same time. Can help people figure out which franchises are going to be most beneficial for them.
By looking at several different franchises at the same time. Can also show people the differences in franchise fees, itches the amount of money that they would have to pay just to purchase the name and the systems and processes.
As well as understanding the different royalty fees that will come with different franchises. And when their Edmonton accounting firm compares those royalty fees to the revenue. They may rule out certain options because they simply are not financially viable.
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Many people who are thinking about becoming business owners, think of franchises says Edmonton accounting firm. Because they think that they will become more successful by purchasing this system.
And while statistics do show that there is some truth to this assumption. With 50% of small businesses in Canada failing within five years. But only 14% of franchises failing in the same amount of time.
People need to consider that not all franchises are the same. And they need to be clear on what they are hoping to accomplish, and ensure that the franchises they choose aligns with that.
By looking at multiple franchise opportunities at the same time. Can help people understand the differences between them. And if one is going to be more beneficial for them than others.
And by getting and Edmonton accounting firm to help them with that. Can truly give them an objective viewpoint about the different opportunities.
People should be asking the franchise for not just financial data for locations. But ask for an accountant prepared financials. Because those will be the most complete, and accurate financials.
And they should ask for these financials for more than one location. So that they can get an idea of average revenue. Instead of just looking at the financials from their most successful location.
And when their Edmonton accounting firm looks at that financial information. They will be able to very deeply into whether this is a great business opportunity.
They will look at not only the financial information. They will also look at royalty against revenue, read the franchise agreement. And look at things that are often overlooked.
Such as the lease in the space that they have, utilities, and even common area charges. So that they can determine if this is going to be a viable business for someone, or not. Especially when applying the royalty fees to this amount.
The next thing that Edmonton accounting firm will be able to help the business owner decipher. Is if the business owner’s time is accounted for fairly in the payroll numbers. Often, this is not the case. And business owners need to be aware of this before they buy the business.
If the previous owner had spent a significant amount of time working in the business. But not taking much of a salary. Business owners need to be aware that they will likely have to put a lot of time working in the business as well. And decide if that something that they want to do.
And finally, looking at the franchise opportunities. Will help a person decide what systems and processes are going to be the most beneficial for them. With the best franchises often having the most complete systems and processes in place.
However, if people are not going to be satisfied with following those systems and processes. If they want to customize too many of them. A franchise may not be the right investment for them.
And will may be better off starting their own business, when that does not require paying franchise fee. Or having to pay an ongoing royalty fee, or systems that they are not using.