Edmonton Business For Sale | How To Buy Franchises?
Many entrepreneurs believe that franchises can be a great business option when they are considering going into business for themselves says Edmonton business for sale. And statistics may support that they can be a great option, 50% of all businesses go out of business within five years, but only 14% of franchises go out of business within five years. That stands to reason that franchises can be successful and viable, but that doesnít mean that business owners should jump into buying franchises without doing their due diligence. There are several things that business owners should take into consideration when looking at whether franchises are a great option for them.
The first thing that people should remember when looking at franchises is that franchises get paid to sell those franchises. They are not business advisors, they get paid on commission. Therefore they may not play the whole story when getting information about their franchise. Entrepreneurs need to be able to think critically as well as do their own research to find out if the franchises the right decision for them or not says Edmonton business for sale.
A great resource that entrepreneurs can use when considering franchises are the right decision for them, is their accountant. The reason why they should bring information to their accountant is because we will be able to think of many things that an entrepreneur might not. They will be able to read the entire franchise agreement, and see if thereís any information missing or incomplete says Edmonton business for sale. Accountant will look at all aspects of the franchise including lease agreements and common foods to royalty fees to determine if there is a high enough return on investment to justify the purchase. Entrepreneurs should definitely consider getting an opinion from accountant when they are considering franchises as an option.
Entrepreneurs should also send that franchises going to show them information from the best franchises that they have, business owners should definitely do research and speak to franchise owners on their own. That way they will be able to get candid answers that may be more realistic than from the locations the franchise took an entrepreneur to go see. They should also take into consideration that looking at locations that have been in operation for several years will be able to give them an idea of how viable this business will be long-term says Edmonton business for sale. Should also ask for financial data from additional locations, in order to get a better idea of an average, rather than just their handpicked locations.
Knowing the difference between playing paper and accountant. Financials can also help make a good decision. Edmonton business processes that plain paper financials are often incomplete, and an entrepreneur considering buying franchises should ask to see the accountant prepared financials. If they want divulge them, entrepreneurs may want to consider why.
Business owners should also avoid buy into the false sense of urgency that many franchisors create when it comes to considering buying a franchise. Entrepreneurs need to know that they should take the time necessary in order to make a good decision and if that means taking more time, thatís the right decision for them.
Often entrepreneurs believe that when they are ready to go into business for themselves, that a franchise is always a great option says Edmonton business for sale. Franchises can be great, statistics support. With 50% of all businesses going out of business within five years, only 14% of franchises go out of business in the same amount of time. The reason for this could be due to a number of reasons including brand recognition, customers familiarity of product, as well as the systems that the franchise has developed to operate their business and sell the products. However not all franchises are created equally, and business owners should always do their due diligence when considering buying any business, franchises included.
First things that they need to consider when looking at franchises, is that the people getting out franchise information are people are paid to sell franchises says Edmonton business for sale. They are paid salespeople, who get a commission every time they make the sale, and they are going to get paid whether you succeed or not. They are not business advisors who are making solid business decisions, they are simply earning an income. They often create a false sense of urgency to brush people into making fast decisions, and entrepreneurs need to understand this in order to not get sucked into making a decision faster than they are ready, and knowing that the key to find the right franchises will be in due diligence.
Entrepreneurs who are looking at franchises should do a business plan before they buy a business, in order to truly evaluate how viable this business would be. This may include talking to their chartered professional accountant to help them test the reasonability of the numbers. The reason for that is an accountant will be able to read the entire franchise agreement with the critical eye, looking at royalty fees as well as comparing those royalty fees to the royalty fees of the same franchise but different locations, looking at the lease agreement and common fees, a well as looking at the payroll to see if this is going to be a reasonable business, or if there is too high of a risk with too little of a reward. Entrepreneurs should always get professional opinions to look at any business including if itís a franchise says Edmonton business for sale.
Other things that they should ask for when theyíre comparing franchises is to ask for additional financial data from additional locations. The reason for this is the franchises likely only going to supply information from their best and most successful locations, which will give a skewed idea of how successful this franchise could be. By getting financial data from more locations, a business owner can get more of an average to see how successful the franchise is across the board. They may also want to consider finding owners to different locations on their own, in order to get some less prompted answers. Those owners may be more honest, or even slightly pessimistic, due to not wanting more competition. It will allow the business owner to get an different picture than the one the franchisors are giving them.