Edmonton Accounting Firm | What To Know About Franchises
Many people are buying franchises, is a way into business ownership says Edmonton accounting firm. And while this can be a fantastic business opportunity for many. There are several things to take into consideration, before signing with one franchise.
One of the most important things that people should take into account. Is that the person that is selling them the franchise. May seem like a business advisor, that they are helping a person make the best decision for them. But they are a paid salesperson.
And they are working for the franchise, in order to sell as many locations as possible. And so they are not going to be as objective as many people think. And will use several different sales tactics in order to sell the franchise locations.
One of the things that they will do, is create a false sense of urgency when selling the franchise. But that is just a sales tactic. And people should avoid getting swept up in this, in order to make a faster decision.
The hiring an Edmonton accounting firm. That can help people get the perspective that they need. Help them look at the information objectively. So that they can decide if this is the right business opportunity for them or not.
They should also ask franchise not just for financial information for the location that they are purchasing. But financial information for multiple locations. So that they can get a good idea of the average revenue for that business.
Then, their Edmonton accounting firm will be able to look at the financial information. And compare things like royalty against revenue. To see if it is a viable business, especially when taking into consideration the royalty that they have to pay. Which may be a monthly fee, or percentage of sales.
They will also be able to look at the payroll numbers, to help a person determine if they are going to be able to run this business effectively or not. For example, if the business owner previously had been working a significant amount of the business, but not taking a large salary.
A new business owner will either have to put that time in themselves. Or end up with a higher payroll number, to run the business, because they will have to hire someone and pay them to work that same amount of time.
And if the previous business owner had a spouse and children working in the business for little to no money. This may not be the right business opportunity. Requiring a lot of free labour in order to be viable.
This is information that their only going to be able to get if they ask for accountant prepared financials, and get an accountant to help them look at that information objectively.
And it is far better to look at this information objectively before they buy a franchise. Then after they purchase a business, and find that they are struggling. They thought the franchise was going to be a better option for them.
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There are many things that business owners should consider when looking at franchise opportunities says Edmonton accounting firm. Because while many people think that franchises are more successful. They are only as successful as the systems and processes that they have created.
While many people think that the value of a franchise is in the known name, as well as the products and services that they sell. And that by purchasing a franchise, they will have a built-in customer base.
The true value of the franchise is in the systems and processes that come with the franchise. And not all franchises come with the most complete systems and processes in their business.
A great example of this is looking at Donald’s franchise. Looking at all of the different systems and processes that they have in place. From recruiting staff, to hiring and training staff. Preparing the food, and serving it.
People know exactly what they are getting into when they purchase this franchise. And that is going to be very easy to follow the system, in order to be successful.
However, not all franchises have processes and systems that are that complete. And they need to understand this, before they buy the business. This is where looking at multiple franchise opportunities of the same time can be very beneficial.
It can help entrepreneurs be very objective, and look at the different systems and processes that come with each one. To make a decision about which franchise opportunity is going to be the best one for them.
They should also consider franchise fees and royalty fees before they purchase any franchise. The franchise fee is the amount of money upfront that they will have to pay, to purchase the name and the systems that they are going to use. And this amount can be very different from one franchise to the next.
They also need to look at the royalty fees. Which are monthly payments to the head office. And it is very important to consider this royalty compared to the revenue. To see if it is reasonable to pay that amount every month.
By looking at different franchise opportunities, can help the Edmonton accounting firm figure out royalty versus revenue. Especially if that is a lump-sum payment, or even if it is a percentage of overall sales.
Another great way that people can make a decision on whether the franchise is great for them. Is by talking to other franchise owners. Doing this on their own, and without any franchise representatives. Get help people get unprompted and unbiased viewpoint of what it is like to own the franchise.
Knowing what due diligence is important to conduct is very important says Edmonton accounting firm. In my hiring the right people, and looking objectively and all of the different options. Can help people make the right decision on what franchise, if any will be the right business opportunity for them.