Edmonton Accounting Firm | Tips For Buying Franchises
When people are thinking about becoming a business owner, Edmonton accounting firm says they often look at franchises first. The reason why they do this, is because they think is going to be easier to own a franchise. Especially if they do not have an idea for a business that they want to start.
And while it can be easy to buy a franchise. Because they have systems and processes. That all business owners have to do, is follow the systems, and work very hard. In order to be successful. However, it also can be more difficult especially if there are a lot of rules that prohibit a business owner from doing things.
Also, business owners need to be aware of what the franchise agreement says. Because some a have hidden fees. Such as a mandatory buy-in to the national marketing program. Or, having to pay for a website through the franchise. At an exorbitant fee.
In fact, when business owners are talking to a representative of the franchise. In order to make a decision on if this is a business that they would like to buy. Edmonton accounting firm says they should keep in mind the person they are talking to. Is a salesperson, and not a business advisor.
While they likely will know a lot of great business information. They are not going to be helping a business owner make the best decision for them. They are going to be helping themselves make a sale. And they often can use a wide variety of sales tactics to make that happen.
One of those tactics is putting undue pressure on a person. By creating a false sense of urgency. Saying things like if they do not sign now, the opportunity could pass them by. In order to get people to sign the agreement, and purchase the business without thinking it through.
If this was truly a great business opportunity says Edmonton accounting firm. A business owner could do their due diligence. And the franchise would understand that. And not try to pressure a potential business owner.
So it is very important that entrepreneurs hire and Edmonton accounting firm. So that they can act as an advocate on behalf of the business owner. And ensure that they are not feeling pressured to sign when they are not ready.
But also, with the accountant can do. Is look at the franchise agreement. And look at the financial information. To see if this is a viable business. And to ensure that there is nothing unexpected in the franchise agreement.
By working together, their accountant and the potential business owner. Can help make the best decision? So that an entrepreneur can love the business that they have bought. And not end up feeling like they have made a decision. That no longer works with their lifestyle, or what they are trying to accomplish.
And ultimately, becoming a business owner is a very big, and important decision. And if the franchise that people are talking to our not willing to let a business owner take the time to decide, then they are ultimately not the right fit.
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Buying a franchise is often seen as an easy way to get into business ownership says Edmonton accounting firm. Despite the fact that there are so many high fees associated with buying a franchise.
In fact, not only is there a franchise fee. That depending on what that is can be anywhere between five figures and six figures. But there is also a ongoing royalty payment. That business owners typically have to make every month. That could either be a fixed fee, or percentage of their revenue.
And while that can be very possible to do. Business owners should understand that before they decide to buy a franchise instead of starting their own business. But, business owners also need to understand some important statistics.
While according to industry Canada, 15% of all business owners fail in the first year of opening the doors to their small business. And 30% fail within their second year of business. Half of all on nor’s that start a small business in Canada will fail by their fifth year in business.
While franchises on the other hand will only have 14% going out of business. Which can often suggest that franchises are far more stable than small independent businesses.
However, that does not mean that buying any franchise is better than starting an independent business. And business owners should hire and Edmonton accountant in order to help them decide which franchise opportunity if any they should purchase.
One of the most important documents that they will need to ask the franchise for in order to make their decision. Is the franchise agreement. It is important to read the franchise agreement. Because it will tell business owners a lot of information.
Such as what is allowed, like any additional marketing methods that they can utilize. And what marketing methods are not allowed. Such as starting their own website, or doing newspaper, radio or online advertising.
And some franchise agreements specify how many hours per day, per week and per month a business owner must work in their business. As well as how many weeks away from the franchise they are allowed to have.
And depending on what a business owner wants to accomplish. By purchasing a franchise. That may or may not fit with them. For example, Edmonton accounting firm says some business owners want to buy a business, so they can spend more time with their family.
Therefore, a franchise that limits how much time a business owner can take off. Would not be a great fit for them. However, if a business owner wanted to buy franchise.
So that they can work extremely hard for the next 3 to 5 years. And then enjoy an early retirement. That might be the perfect model for them.
Ultimately, business owners need to be clear with their Edmonton accounting firm about what goals they have. And once they are solid on their goals. Look at a multitude of franchise systems at the same time. So that they can decide which one franchise aligns best with an entrepreneur’s goals.