Edmonton Accounting Firm | Why Buy A Franchise Business
Many people are intrigued about the idea of buying a franchise says Edmonton accounting firm. And the reason why, is because they like the idea of owning a business that has brand recognition. As well as a built-in customer base.
However, while this is something that comes with many franchises. People who own franchises also do not have a lot of freedom. Such as having to buy their supplies from one vendor, regardless of if they can get it less expensive elsewhere.
Or having to pay into an advertising campaign, because they are not able top note of it. Even though it is an additional price on top of their royalty fees.
And while having a franchise might be somewhat limiting. It also means that people will have recognition, as well as built-in processes and systems. That people can simply follow in order to walk the path to success.
However, Edmonton accounting firm says that if people are not interested in following the systems or processes. And they want to customize many of those things.
Or if they are not going to be happy with having to purchase their supplies from one vendor. Or paying into a national advertising campaign. This may not be the best business opportunity for them.
These are some of the things that business owners need to take into consideration. Before deciding whether to pursue a franchise opportunity. Or if they should simply open up their own business.
Because not only is there a fee to purchase a franchise in addition to paying for it. There are also royalty fees that business owners must pay every month. In order to continue using the name.
If business owners still want to look at this opportunity. Edmonton accounting firm recommends that they look at two or three different franchises at the same time. So that they can look objectively at all of the different opportunities.
One mistake that many business owners make. Is approaching their accounting firm. With one franchise that they already have their heart set on. And are unable to look objectively at the opportunity.
By looking at three different franchises at the same time can illustrate the difference between things like royalty structure. Whether there is, whether there is no cap on the royalty fee.
Or if business owners are going to have to pay more royalties the more successful they are. Can factor greatly into a business owner deciding to purchase one franchise or a different one.
Something else that business owners might want to take into consideration. Is what kind of help they will get from the head office. Some franchises offer a lot of help, and hands-on work.
While other franchises do not offer anything, except for a collection of the royalty fee every month. Some franchises come with a website, and advertising built into the cost.
And other franchises have all of those things, but require additional payments to access them. Which can cut into the profit significantly.
By deciding objectively with the help of their accounting firm. Can help business owners make the right decision for themselves.
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One of the most important reasons why business owners prefer franchises, is because they have a higher success rate in Canada. For example, half of all small business owners in Canada fail within five years. However, only 14% of franchise owners fail in the same amount of time.
And while enjoys owners have a lower failure rate. 14% is still a loss of business owners to fail. And business owners still need to ensure that this is the right decision for them.
To ensure that they do not become one of the 14%. So that they can have their business for many years to come. This is why they should contact their Edmonton accounting firm to help them look at the viability of the franchise.
While the person selling them the franchise will likely create this false sense of urgency. Edmonton accounting firm says this is done only to inspire people to make a snap decision. Instead of looking at all the information to make a well thought out decision.
They thing that their accounting firm will request. Our accountant prepared financials from the franchise. Instead of the plain paper copies that they are likely going to get.
The reason why they will want to get accountant prepared financials. Is so that they will have and complete financial information. In order to make some objective decisions based on the businesses.
One of the things that the accountant will do. Is ensure that the business owner’s time is accounted for fairly in the payroll numbers. Because if they are not, it will make the business look considerably more profitable than they are.
For example, if a business owner is putting twelve hours into their business every single day. But only paying themselves for half that time. The person that purchases the business will either have to put in that amount of free time without getting paid during the same amount of money.
Or, they will have to hire staff, and make less money than they initially thought. When they were first looking at the financial information of the business. Making this decision as informed as possible is very important.
The Edmonton accounting firm also read the franchise agreement, to see if there is anything hidden in there that person is not expecting. And apply royalty against revenue, to see if that is a realistic amount to pay every single month.
Bill also be able to look at utilities, lease agreement and common area charges just to name a few. Because these are things that are often overlooked. But can make huge difference to the viability of the business.
And at the end of this process, if a business owner does not feel the same about purchasing the franchise.
Because it does not look as good as it once did. They will know that they made the right decision. By not purchasing a business that is not in their best interest to run.