There are over 1500 different franchise companies in the United States. When searching for a franchise, you can find them in almost any industry, from computers to cars, from baby clothes to ice cream cones. I am sure you have heard of the big ones, McDonald’s, Subway etc…
There are an estimated 1,500 different franchisers (franchise business companies) operating in the U.S. There are believed to be more than 750,000 franchise businesses in the U.S. The franchising industry and businesses employs over 18 million people in the U.S. In 2004, it is estimated that franchise businesses were responsible for over 1.5 trillion in economic output. The franchise industry accounts for 40% of all retail sales in the US. A new franchise business opens every 8 minutes of every business day Approximately one out of every 12 businesses in the U.S. is a franchise business. Franchise fact: More than 75 different industries use franchising as a means to distribute goods and services. The average royalty fees paid by franchisees range from 3% to 6% of monthly gross sales. Most franchise companies have fewer than 100 units. The average length of a franchise contract is 10 years.
There, you now have most of the statistics about franchises, but what is the real question?
Here it is: “Is a franchise right for you?”
A franchise is right for you if, you are looking for a way to be the boss, or be in control of your life. It is right for you if you want financial freedom and a way to generate the income that you need in life. Now that isn’t to say that you can definitely make money with a franchise, but the statistics show that more businesses are successful as a franchise, than if you were to open an independent location doing the same type of business. Why is this? Well when it all comes out, simply put, when you buy a franchise, you buy a “System” or “Method of doing business”. Most of the time there is support and training as well as a brand name to go along with the Franchise. When considering any franchise, you want to ask the important questions.
1. How successful is your franchise? How many failures have you had and why did they fail?
2. What is my Return on Investment and how long will it take?
3. What is the ramp up period for this franchise?
4. What type of support will I receive?
5. Do I get a protected territory?
6. Who is your biggest competitor and why are they able to compete with you?
7. How fast can I expect to be open?
8. What is the number 1 obstacle to opening this type of franchise?
Those questions and more should be asked, that is just the tip of the iceberg when it comes to the number of question you should ask. Did you notice that I didn’t put in there: “How much does it cost to open this franchise?” That question is really irrelevant, as if you can afford it, then it doesn’t really matter, because if you are successful, you will see a return on your investment and you will have the freedom that you want. Freedom is worth a lot. Also, the cost of the franchise is not the most important question, yet most people focus on that question and forget the other important ones like the ones listed above.
Time is money right? Well money is time too. Sometimes you have to pay for the time you need, that is what a franchise does, it eliminates a lot of the startup time because they have already made the mistakes and found the suppliers etc… So you don’t have to spend the time to do all of that. However, you get what you pay for, so make sure research the franchise you are interested in before committing to anything on paper.