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If you are thinking of becoming a franchisee, one of the critical considerations is the franchise costs. Starting your own business is a serious investment, whether you go it alone or choose to join the support and guidance of an existing franchise.
How much does it cost to buy a franchise? What things should you consider when looking at franchise costs? According to Seth Lederman, a Forbes Business Council Member, here is a breakdown of the potential franchise costs.
There are several fees that you will pay for your chosen franchise. Some are at the beginning, like professional fees to an attorney to review your franchise contract. Some are ongoing costs, such as royalty fees that will be regularly paid to the franchisor. Here is a list of the typical franchise costs.
These expenses add up to the total financial investment of your franchise.
In addition to the franchise costs, it’s important to consider how much time will need to be invested to pursue your dream of owning your own business. Your time is valuable and you should consider how much of you, your energy and your focus will be required.
Consider the type of franchise that you are pursuing. With an owner/operator franchise, you are the business. This is an ideal choice for those who want to go out and service their clients. In an owner/operator franchise model, you can expect to make a serious time investment because you are the one doing all the work.
An executive model franchise is another option. This type of franchise is an investment strategy. Executive model franchise owners do this as a means of diversifying their portfolio. The executive model doesn’t mean that it won’t require any of your time commitment or energy.
With executive model franchises, there is mis-perception that the owner can step away and the business will run itself. There is no franchise that runs itself; the franchisee will have to be involved. This involvement can include managing it yourself or managing your manager.
Finally, a third model is a blend of the two. With this model, your involvement will be closer to the owner/operation model in the beginning. In the beginning, your involvement in the franchise will be closer to the owner/operator model. You will be running things on a daily basis. As the business becomes established however, you will be able to take a step back and modify your schedule.
For many, the final model is the goal. They envision a business that will allow them to eventually step away and relax or travel. They do not want to buy themselves a job that requires their attention for five days a week, eight hours a day.
The end result should be a business in which you enjoy what you are doing. No doubt, owning your own business is hard work, but you can determine the amount of work to a large degree, depending on what you want. Be clear about the level of involvement that is required and that you want to give before you start, and you will find that you can achieve a much higher rate of satisfaction in your new endeavor.
There are many ways to achieve to realize your dream of owning and operating your own business. One of the advantages of choosing a franchised business is that you enter knowing what the franchise costs are. Franchisors can provide a very accurate picture of what it will cost to start the business, your ongoing expenses and a good estimate of when your revenue stream will turn positive. This is valuable information that you won’t have if you start your own business.
Full Forbes Business Council article.
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