Edmonton Accounting Firm | What Is The Right Franchise To Buy
Buying a franchise can be a great opportunity for a lot of people says Edmonton accounting firm. But the one mistake that business owners should not make. Is assuming that all franchise opportunities are the same as each other. Or that all franchise opportunities or even good ones.
While studies have shown that half of small business owners in Canada fail within five years. Some statistics suggest that only 14% of franchises go out of business within five years.
And there are many reasons why franchises may be more successful. Starting with brand recognition, and ending with the systems and processes that they have in place in the business.
However, business owners need to ensure that if they are looking at buying franchises. That they should compare three different franchises side-by-side. To help them make an objective decision.
There are different franchise costs, royalties and systems that come with each different franchise. And some have everything included, from websites, advertising and signage for example.
While other franchises have business owners paying the royalty, but then additional fees on top of that. Such as having to pay additional amounts for their website, for advertising online, radio or television.
And that can make the fee structure very different, as well as the pricing extremely different from one location to the next. Which is why business owners should be comparing different franchises with each other.
And while a lot of the people representing the franchise can seem very persuasive. Edmonton accounting firm says that is actually their job. And while they might appear to be a business advisor.
They really just our salesperson. Who gets paid for every franchise they sell. And not necessarily get paid any more money if they are able to sell the franchise to business owners or able to become successful.
And since they are just a salesperson. They are not acting in the best interest of the business owner. They are acting in the best interest of themselves.
And are not there to help business owner make an objective decision. However, if business owners are able to hire and Edmonton accounting firm to help them look at the franchise opportunity.
That accountant will be objective. And help the business owner make the best decision for them. By looking at not just the financial information. But look at information such as royalties versus revenue.
And be able to consider things such as rent, common area charges, and any additional fees that are going to be charged once a business owner purchases the franchise.
That might negatively impact the profitability of the location. That are not necessarily represented in the financials that they give out in the first place.
While franchise can be a great opportunity for many people. Not all franchises are the right opportunity for each business owner. And just like any other business opportunity. The decision needs to be made objectively, and with facts. In order for the right decision to be made.
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Often, people bring some franchise information to their Edmonton accounting firm. Convinced that this is the opportunity of a lifetime. And want their accountant to go over the information.
And while some of the opportunities are fantastic. And can help people become business owners and hit the ground running faster. Because of all of the systems and processes that come with the franchise.
Not all franchises are the same. They all have different royalties and payment structures. As well as different processes and systems that come with them.
And for some business owners, a franchise is not really a great investment for them to begin with. Because they want to customize too many of the systems and processes.
And if they want to create their own systems and processes. Why are they burdening themselves with buying a franchise. And paying a monthly royalty fee.
When they can start a business without all that additional expense. And then be able to set up their own systems and processes. So that they can run a business way they see fit.
However, if business owners do want to take a look at the franchise opportunity that they are presented with. In order to see if it is the opportunity that they think it is.
One of the first things that their Edmonton accounting firm will request. Are the accountant prepared financials instead of just the plain paper financial copies that they are likely to have received.
While plain paper copies of the financials can contain some good information. This information is not going to be complete. And will not be verified by an accountant.
And while they are requesting accountant prepared financials from the franchise. A business owner should also ask for accountant prepared financials from other locations, other than the ones that the franchise is volunteering.
The reason why a business owner should get financials from different locations. Is because the franchises likely only giving the financials from the best locations.
Because they want to sell the franchise by making it look as good as possible. But if an entrepreneur gets financial information from more average stores.
This will give them a better idea of what a typical franchise will do. And not just the best stores in the area. And while they might feel pressured for time by the person they are talking to about the franchise.
Business owners should avoid feeling pressured. Because this is a common sales technique. Used to get people to make quick decisions. That helps them sell more locations.
However, the person selling franchises is getting paid to do this. And will have other opportunities, even if this opportunity does not last.
Therefore, business owners need to take their time, hire and Edmonton accounting firm to help them look at the financials. And ask for all of the financials they need.
And if the franchises not willing to give them the financials that they request. They should take that as a sign that this is not the right opportunity for them. And to keep looking at different franchises to buy.