Edmonton Accounting Firm | What Is The Best Franchise To Buy
Buying franchise can be attractive for a number of different reasons says Edmonton accounting firm. From brand recognition, having systems and processes already in place. To having a higher success rate, franchises are very popular for many business owners.
However, business owners do need to keep in mind. That not all franchises are created the same. Not only do some have different royalties and pricing structures. Such as advertising fees that are on top of their royalties.
Some royalties are capped, and some keep increasing no matter how much in revenue a business owner makes. And some of the royalty fees do not always make sense.
Each is why business owners not only should hire an Edmonton accounting firm to help them look at the opportunities. But they should look at franchises side-by-side. So that they can be very objective about each one.
When they talk to their accountant. Their accountant will to ask for accountant prepared financials of the different franchise locations. To review in order to help make an objective decision.
Typically, the franchise will provide plain paper copies of the financials. And while this can give a good preliminary idea of the financials. The plain paper copies are incomplete and have not been verified by an accountant.
If a business owner is going to put thousands of dollars towards this business. They should at the very least ensure that the financials are what they expect before they proceed.
But in addition to that says Edmonton accounting firm. Business owners should also ask for accountant prepared financials for the locations that the franchise did not volunteer.
The reason why, is because the franchises trying to make the company look as good as possible financially. Under only providing the financial information for the best locations.
By getting the financial information for average locations. Can help business owners understand what they are likely going to make as a franchise owner. And not just what they could make if they have one of the best locations.
Another thing that accountant recommends business owners do. Is contact each of the franchise locations themselves. And talk to them on their own to find out their true opinions about the franchise.
This is going to be a great way for business owners. To get a good idea of what the owners themselves who have a location think of the franchise. And this way, are most likely to get objective answers.
By getting the right financial information, and talking to a wide variety of franchise owners. Can help people make the best decision. By being objective about if they want to purchase this franchise or not.
If the financial information makes sense. A franchise can be a great opportunity for a lot of people. And by using the franchise system, can find a lot of success in business. Without having to do a lot of the hard work and creating a system themselves.
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Many people are attracted to franchise says Edmonton accounting firm. Because they are a known business, with a proven track record. And often have a higher success rate.
For example, according to industry Canada, half of small business owners in Canada fail within five years. However, franchises have a different success track record.
With only 14% of all franchise owners failing within five years. And there could be a wide number of reasons why franchises are more successful than other small business owners.
Not only do franchises come with brand recognition. And a built-in customer base, who are already familiar with the brand and the products and services that they sell.
But franchises come with a set of processes and systems. That as long as a business owner follows those processes and systems. They can duplicate the success that other people have found with the same system.
However, Edmonton accounting firm recommends that if a business owner wants to customize too many of the processes. May not be a good investment.
Because if a business owner wants to create their own systems and processes. They are better off starting their own business, and creating their own systems and processes. That might take a little bit longer.
It will be less expensive than paying hefty franchise fee. And then ongoing royalty payments in order to keep the name. Instead, they can create their own business with their own processes and systems without the cost.
If business owners do want to look at the different franchise opportunities that are available to them. They need to look at all of the different financial information. Including the royalty fees, as well as the payroll information from the franchise.
This is very important to take into consideration. Because if the business owner is not having their time accounted for in the payroll numbers. Business owner may not end up with an accurate view of what it would cost to staff the business.
For example, if a business owner is working six days a week in their business, and working twelve hour days. But they are only accounting for eight hour days five days a week.
It might make the business look far more profitable than it would be to another business owner. Who will have to pay staff members a fair wage to work those same hours. To get the same results.
Therefore, business owners need to hire their Edmonton accounting firm to look at all of the numbers. And consider things that are most often overlooked. In order to get a good idea of how profitable the business is itself.
Often, business owners will have this sense of urgency created by the people that they are talking to about the franchise. And they need to realize that this is just a sales tactic.
The franchise gets paid for every franchise that they sell. And if this particular opportunity is no longer around once the business owner does their due diligence. Chances are extremely good that another opportunity will come around very quickly.
Therefore, business owners should never feel pressured into making this decision. But consider it carefully with the help of their Edmonton accounting firm. To make the best decision for themselves.