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By and large the franchise industry is full of excellent opportunities to run proven businesses and in all but a very few cases these franchises are there to expand their existing brand and push to have nationwide coverage. However, with the Internet becoming the global phenomenon that it has over the past ten years, with it has came a new type of franchise, one that is based solely on the Internet.

Although there are of course many successful ways of operating a business on line, there are some internet franchises you have to watch out for and below are a few reasons why.

1. In many cases, in fact at least 80% of the internet franchises I have looked at, the opportunity has been set up to be an opportunity and has not ran itself as a successful standalone business. The essence of franchising is that you are expanding an existing tried and tested method and many Internet franchises have failed to follow that “essence of franchising”. Although there are successful Internet franchises based around the 2made to franchise” model, there are also many which quite simply cannot meet the promises made in their promotional materials.

2. Many are multi level marketing schemes masquerading as a franchise. These you have to be particularly wary off, quite simply they sell you a method which in turn is just a document on selling the same method on to someone else. You will get a standard template site, a pdf ebook and a pdf marketing plan which simply documents how you can sell the same package on. although not usually a pricey “franchise” you will find that they are a complete con, conning you and conning the next person that buys it from you. Anything that smells of MLM, run a mile from.

How to tell a good Internet franchise.

There are some tricks to identifying an opportunity which is likely to be profitable and keep their promises made in their promotional materials. There are several tools online to help you with this and below are some ways of identifying them.

If the Internet based franchise relies ion website traffic then:

1. check their own sites alexa ranking. This will give you an idea of how much traffic their own site is generating. Alexa works like this. The most popular site on the internet will have a low ranking of 1, the least popular of several million, the 1 means it is the most visited website on the internet, the several million means it is the, example, 23rd million most visited site on the internet. Anything less than 1 million means they are getting half way decent website traffic. anything under 200,000 means they run a busy site and anything under 100,000 means they are very very good at what they do. If the franchise you are looking at is based around Internet traffic yet their alexa ranking is several million then they are not doing very well themselves so how are you expected to do well if they cannot?

2. check their Google Page rank. All sites are given a page rank by google, most small to medium businesses had a page rank of 2 or 3, well establishes sites 3-5. If the site you are looking at has a page rank of 0 or 1 it means they have not been doing much Internet marketing and like the above points, if they cannot market themselves how are you supposed to do it?

My issue with Internet franchises is simply that there are so many which seem to fail. There are of course many good ones, CityLocal for example is a fantastic franchise with a track record of success, however there have been dozens of franchises trying to emulate what CityLocal have done and they have all failed, taking their franchisees down with them. CityLocal is not the only decent internet franchise out there of course and there are many others, again though it’s a case of weeding the good from the bad. the trick is in the research, ensuring you contact the existing franchisee base and do your on line research well will help you choose a franchise which is profitable and successful in its own right and likely to succeed for you too.

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Does it refer to how much money a person must have, or can it be financed? Is it referring to some kind of fee or is it referring to the complete start up of the business? Please help me understand. thanks

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Hello there,

I would like to start my own business, and I’m interest in buying a franchise ( Restaurant ) this will be my first business, and I would like to know if there are any available grants for individuals like me. Where can information about available loans for this kind of business.
Thank you,

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I’m really considering to buy a franchise fitness gym.
I was a member of one a few years ago and loved it.There are a couple around for sale due to the owner moving but want to due some reseach on the business.

I have a couple of options to buy into one.
1.Buy one that is already set up.(ones been open over 5 yrs and the other 1 1/2 years old. and both seem to be doing well)

or

2. Set one up myself.

Any ideas on how to find out if it is a good investment?

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Have you always wanted to go into business for yourself? If so, it’s possible that you’ve considered whether buying a business franchise is the right choice for you. Starting a business in any field is a significant life and professional decision, and, as with any major decision, it is important to weigh all of the pros and cons before taking the leap into a business franchise opportunity.

There was a time when someone wanting to start a business would follow the traditional route of selecting an industry, researching and establishing financing, and then hanging a shingle on the doorpost. These “mom-and-pop” businesses in many ways became the backbone of economic growth and development. Yet, as many entrepreneurs will readily tell you, independent businesses, even with their allure, often carry great risk, and the vast majority of small businesses fail within the first few years of operation.

Enter the franchise business opportunity. Although franchising is a relatively new business concept as measured against the scope of history, it is a business option that carries a much higher success rate than traditional independent businesses, and this is particularly true if you are a first-time business owner.

According to AllBusiness.com, a leading business information and resource portal, among the advantages of purchasing a franchise over launching a traditional independent company are “instant brand awareness and credibility, administrative and/or technical support, franchisor-provided training, quicker return on investment, strong management, and a network of other franchisees and associations dedicated to supporting franchisees.”

While as an independent business owner, you are solely responsible for costly promotion and marketing of your product or service, as a franchisee, you usually have the benefit of national media marketing and advertising done by the parent franchise company. In addition, independent local businesses often find themselves in direct competition with well-backed franchises that simply have more resources to promote and operate their businesses.

That said, however, the very ordered nature of franchise business opportunities may come as a disadvantage to some, as by an established franchise system the creativity of the entrepreneur is often curbed. Yet, given the support available to franchise buyers and the numerous low-cost franchise opportunities, for many, purchasing a franchise still holds noticeable advantages over starting a traditional business.

Thus far, we have focused on the benefits and drawbacks of purchasing a franchise opportunity as opposed to opening a traditional business. But perhaps your choice is between buying a franchise and remaining at your traditional job or, if you are just entering the workforce, between purchasing a franchise opportunity and getting a traditional job.

There are unquestionably distinct advantages and disadvantages of buying a franchise business opportunity, and if you are considering taking the leap from employee to entrepreneur, it is important to carefully weigh both the pros and the cons of purchasing a business franchise.

Benefits of Buying a Franchise

As reported by AllBusiness.com and the International Franchise Association (IFA), the benefits of traveling the path of business franchise ownership are many, and they include:

1) Probability for success – With an established support system, franchisees are often able to avoid many pitfalls that lead to the failure of numerous small independent businesses.

2) Brand recognition – Customers become familiar with the franchise brand and learn to trust that brand, thus increasing business for franchise owners regardless of location.

3) Availability of training and support – Franchisors offer training programs for new franchise owners prior to the “grand opening” of their franchise outlet, and once the franchisee’s new business is “up and running,” franchisors provide ongoing support in the form of meetings, networking, additional training programs, research & development, etc.

4) Joint purchasing power with other franchises – While many independent business owners lack sufficient resources to do extensive advertising or even to maintain inventory at bulk levels, franchising allows entrepreneurs access to the franchisor’s purchasing system so they can leverage outlay to achieve a greater return on investment.

5) Experience of the franchising company – Perhaps the most compelling advantage of franchising is the benefit of the experience of the franchisor. This significant “pro” minimizes risk among franchise buyers both by helping them avoid common mistakes and by granting them access to proven systems of business operation.

Drawbacks of Buying a Franchise

Even with their allure, however, franchise ownership also carries several cons that should be carefully considered before making the decisions to become a franchisee.

1) Risk – Although franchising significantly reduces the risk of business ownership, it does not eliminate it altogether, and as with any entrepreneurial venture, the success of a business franchise depends largely upon the efforts and determination of the franchise owner. It is by no means guaranteed.

2) Comparison with other franchises – While brand recognition is listed under the “pro” column, it also has the potential to be a “con” in the world of franchising. Just as consumers learn to trust a brand based on positive experiences, one negative experience can turn a buyer off to your franchise, even if your particularly branch was not at all involved in the negative scenario. Thus, the very nature of franchises and one of their chief success components also can present a primary drawback of franchise ownership.

3) Lack of independence – Again, although proven systems of business offer great benefit to the franchise owner, operating within the franchise system also imposes limitations on the entrepreneur. He or she is often is not free to pursue creative ideas at will, as the franchisor requires adherence to established rules and regulations.

4) Management responsibilities – When considering buying a franchise, it is vital that you are honest with yourself regarding your management expertise and capabilities. This is an area that many do not automatically relate to franchising, but the reality is that franchise ownership often requires human resources and business management and development. And this is often easier said then done. Although prior experience is not always required, honest evaluation of your current skills is paramount to measuring your potential for success.

5) False expectations – Franchising is by no means a “get rich quick” opportunity, but sadly many franchisees carry unrealistic expectations regarding their capacity to earn significant income in a short period of time. Just as any business requires extensive determination, hard work, and steady commitment, so, too, does franchising, and it is important that anyone considering buying a franchise business opportunity keep realistic expectations regarding the effort involved.

Inarguably, franchise businesses carry great potential for success. Yet they also present unique disadvantages to the franchise owner. Through carefully weighing all of the pros and cons, you will be able to determine if buying a franchise is the right choice for you.

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I need to start my own business. Where do I apply for a loan? Or how do I get a government grant? I have no down payment, but I have grade A credit, and virtually no debt.
Or how do I find a buisness partner, who maybe has the start up money. especailly if I don’t know anyone persoanlly.

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I am working in Hospitality business for about 10 years now and mostly in franchise. I want to buy a motel and was looking for quite awhile now and finally found one. The problem is its $2 million dollars and they need 15% down which comes out to around $300,000.00, I can get up to $103,000 but was wondering how to I make up the rest.

I am a first time buyer and I have an average credit score (around 650). Will the bank help me with this and how do I approach the bank about lending me rest of the money. Any help is appreciated.

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The purchase of a courier franchise business is different from the purchase of an independent business. As a franchisee you will be party to a long-term relationship with your courier franchisor and you will agree to run the business in accordance with the franchisor’s system.

Buying courier franchises has the advantages of offering many benefits, such as:

A uniform, consistent business that often relies on a successful formula

Support from the franchisor in respect of knowledge relating to management, industry, marketing, advertising and buying power

Use of an already established business name and format and a reduction of business risk

It also involves the payment of fees and/or percentages of turnover to the franchisor, a reduction of independence through franchisor control of management, and there may be factors that adversely affect a franchisee that are outside its control, e.g. reputation risk.

Before buying into a franchise you will need to evaluate the franchise opportunity. You will need to assess the business itself, the franchisor, other franchisees within the system, financial matters, what your obligations and entitlements will be, and decide whether you want to be a franchisee. You will need to consider the advantages and disadvantages of a franchise business, and have read and understood the franchise agreement and disclosure document provided by the franchisor.

Make sure you obtain relevant information

The following are important factors you must give consideration to.

The information provided in the disclosure document. This will give a useful insight into the current status of the franchise system.

The business model – How successful is it? Does it have a solid business plan and marketing strategy? Is there a demand in the marketplace for the goods or services on offer? Are there other competitors?

The track record and/or reputation of the franchisor – How long has it been in the business? What are its motives for franchising? Has it complied with the laws in relation to the business?

The support the franchisor will provide to you – Product supply, service support, advertising, marketing, reputation, site location, operations manual, policies, guidelines.

How other franchisees are faring in the same network? The franchisor is obliged to provide you with details of other franchisees in the network in the disclosure document. You should be able to contact franchisees directly and ask frank questions about their experiences.

How much will it cost? This includes start-up costs, working capital, operating expenses (including administration, marketing, staff, signage, customer service expenses), royalties, and other associated expenses.

If goods are supplied by the franchisor – What are the terms of trade? Can you purchase goods from outside the franchise network?

The franchise agreement – What is the term of the franchise? Can it be renewed? What happens when the franchise ends? What are your obligations?

The location of the courier franchise – Where will your franchise be located? Is there a lease on the property? If so, can it be assigned? What territorial rights will you have? Are they exclusive? Is the territory clearly defined? Will you have a choice of territories?

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There are many advantages to Franchising. When you buy into a trusted name, take on its fame and programs, you can be sure to have a business that people will recognize quicker than a start-up mom and pop-type business. In fact, it’s one of the most common business expansion tools. Not only this, but entering into Franchising is like entering into a family: there are other people there who will help you with everything from day-to-day operations of your business to buying your business’s equipment at the lowest price possible.

One of the biggest advantages of Franchising is the draw of the brand name. People recognize brand names, and because of this, the name of a business is worth quite a bit. People come to trust names they see again and again because they associate this frequency with quality and consistency. Soon, people become loyal to certain brand names. Franchising helps develop a brand name’s worth by upping the number of businesses popping up around the world.

Buying into a franchise is smart because it will make dealing with banks easier. A bank is more likely to give you money if they know you’re investing in something that has found success before. Additionally, if people know the name of the franchise, it will make it easier to attract customers to your establishment.

Another great plus to Franchising is that a person doesn’t have to market their business or learn how to do such things as accounting or distribution: The business’s model is already firmly in place. Many statistics say that as many as 90% of new businesses fail in the first few years because it’s hard to get the business generating funds while learning the ropes of what works and what doesn’t work. A franchise’s model is proven – it’s why people what to buy into the business – and it makes it easier to keep your business afloat. Once you’re in charge of a franchise, you’ll have a manual that explains the business’s ins and outs and will make day-to-day operations easy as pie.

When it comes to a franchise, it’s easier to buy your equipment and materials because people know the name. The other folk involved in the franchise system will be a great support system when it comes to buying materials. Additionally, one of the biggest advantages of Franchising is that you don’t have to spend as much on marketing and publicity: the more franchises there are, the more publicity you’ll receive. The sheer number of businesses helps establish a brand’s credibility.

Ultimately, there’s less risk involved with opening a franchise, and this is perhaps Franchising greatest advantage. Though the cost may be high to buy into a well-respected name, the possible rewards are much higher. As always you need to ensure your research is done in a manner which means you have all the facts in place, doing your due diligence will ensure that not only the franchise is right for you but that it is one that is going to be value for money too.

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What are the universal No No’s when buying a restaurant franchise? I am interested in being a business owner. I am tired of making my employer rich. I only have a first mortgage on my home – can that home still be used as collateral with a first mortg. on it? There is about $16K equity in the home currently. Or do I pull cash out of the home (refi) for business start up $ What is the best fast food restaurant franchise to buy? Please inform.

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