Buying a franchise can be a great move for a would-be entrepreneur who doesn’t want to create a new business from scratch. In theory, franchisees acquire a model that already works on every level, from branding to pricing to marketing. A ready clientele eagerly spends on Dunkin’ Donuts, McDonald’s and 7-11. The market has tested the best recipes for glazed crullers, Egg McMuffins and the right combo of energy drinks to stock next to the register. But making a go as a successful franchisee can be a lot more complicated than simply finding an appealing brand and plunking down some cash. For a taste of what can go wrong, see Forbes’ piece about the problems at sandwich franchise Quiznos, which paid $206 million to settle a suit brought by franchisees who claimed the chain had oversold its markets and excessively marked up supplies.

If you’re thinking of becoming a franchisee, how should you prepare yourself? We asked three professionals with extensive knowledge of the franchising world. Ed Teixeira is both a former franchisor and former franchisee, and the author of two books on franchising, including The Franchise Buyer’s Manual. Josh Brown is a Carmel, Indiana lawyer who specializes in franchising, and Sean Kelly is a former executive at the successful Amish pretzel franchise Auntie Anne’s. Kelly runs the muck-raking website, Unhappy Franchisee. They recommend you do these 12 things before you buy a franchise.

Give yourself a personality test.
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There’s a reason military veterans tend to be successful franchisees, says Brown. They’re used to following the rules and operating within a highly regulated system. If you’re the creative type who likes to cook without recipes, paint walls wild colors and experiment with mood lighting, you’re probably not cut out to be a franchisee, says Kelly. “You have to know that you’re going to be an implementer, not a creator,” he says.

Study the field.
Avail yourself of publicly available information on the ABCs of franchising. An excellent place to start: The Federal Trade Commission’s Guide to Buying a Franchise. Did you know that many franchisees are required to spend a designated amount on advertising and yet have no control over how those ad dollars are spent? Two other helpful sites: The International Franchising Association’s Franchising 101 guide and The American Association of Franchisees and Dealers’ Road Map to Selecting a Franchise.

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Assess your strengths.
How do you feel about cold calling? Business-to-business sales? Teixeira used to run a franchise called Vehicle Tracking Solutions, which sold GPS systems to trucking companies. The product involved technology, which attracted tech-savvy franchisees. But some of them hated sales, the most essential part of the business. They flopped. Teixeira recommends asking friends and family to help you evaluate how well your personality matches the business you’re considering. Experience also matters. Thinking of running an Applebee’s? What do you know about food service and management? “There’s a big misconception out there that franchises are just a business in a box,” says Brown.

Count your money
Look beyond the minimum requirement for buying a franchise, usually listed as the franchise fee and the cost of equipment. Getting a franchise up and running can involve hefty marketing costs and the need to survive on break-even books, or a period of net losses, before your business catches on. Even if you’re franchising a well-known brand like 7-11, customers have to discover your new location. The Franchise Disclosure Document (FDD), which franchisors must make available to would-be franchisees, is required to list additional working capital under item No. 7. But in the FDD, Teixeira says most franchisors calculate three months’ worth of expenses, when it’s wiser to think of your likely expenses for up to six months. The FTC’s guide says it may take a year to become profitable. You should have access to capital that will cover both business expenses for six months and personal living expenses for a year.

Beware of franchise consultants.
Most franchise consultants are paid salespeople, according to Sean Kelly. Consultants want to get you signed onto a franchise deal as quickly as possible, because their cut is often half of the franchise fee of $20,000 or $30,000. Ask them to make their financial arrangements clear, up front.

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Gallery: Best Franchises 2016
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Don’t believe the “Franchise Lie.”
An urban legend about franchise failure rates persists: Franchises only fail 5% of the time. Not true. They fail at roughly the same rate as other businesses, which is to say two-thirds of businesses with employees last two years, and half survive at least five, according to 2012 findings by the Small Business Administration. Yet many franchisors make claims like this: “after five years in operation, more than 90% of franchises continue to operate while less than 25% of privately owned companies stay in business.” Wrong.

Dig for dirt.
Take advantage of sites like Sean Kelly’s Unhappy Franchisee and search for negatives about the franchise you’re considering. For example, Kelly has run a series of exposés on NY Bagel Café, documenting the stores’ high closure rate. (A consultant to the chain, Richard Taggert, disputes Kelly’s reports and says the company has had only had a handful of closings in the last decade.) Blue Mau Mau also reports on the franchise industry.

Talk to franchisees.
FDDs include the names and phone numbers of current franchisees. Talk to at least 10. Ask about pros, cons, and hidden costs. What did they learn that they didn’t glean from their research before they became franchisees? How long did it take them to become profitable? How much did they budget for their enterprise, and how much did they wind up spending? What was the toughest part of building the business? How supportive is headquarters? How challenging is it to hire good staff? Ask if, given what they know now, they would do it again or recommend the franchise to a close family member? Keep in mind that “ego is a big thing,” says Teixeira. Some franchisees might not want to admit that they’ve struggled. All the more reason to talk to as many as you can.

Read the entire Financial Disclosure Document (FDD).
The FTC’s online guide describes how to make your way through this document, which can run 50 pages or more. Don’t be intimidated. The FDD offers a gold mine of information, like bankruptcy filings by the franchisor, litigation involving the company and/or its executives, the type of training the franchisor offers franchisees, and costs that may not seem obvious, like opening day expenses when headquarters may want you to give away free stuff and do special promotions. (For more on evaluating the FDD, click here.)

Consider hiring professional help.
If you have accounting know-how and feel comfortable reading a balance sheet, you’ve insured a past business and you’ve negotiated legal contracts, you may not need an accountant, insurance agent and lawyer. But with some self-interest, lawyer Josh Brown says you should have a lawyer and other professionals review your financial health and how it will be affected by the franchise arrangement before you sign a franchise contract. His pitch for his services: “If you’re buying a business that costs between $150,000 and $1 million, you need an attorney to look at the documents and tell you what they mean.” He says he charges “a few thousand dollars” to help most of his franchisee clients get started. An accountant can help you assess whether the numbers add up.

Explore working in a store.
This is the best way to see how a franchised business works from the inside, and whether your personality fits the company culture. Domino’s strongly favors franchise applicants who have worked their way up from delivering pizzas and since 2008, Dutch Bros., a successful drive-through coffee franchise based in Grants Pass, OR, has stuck to a policy of granting franchises only to people who have worked for the chain for at least three years. Kelly recommends spending six months as a worker before you become a franchisee.

Do a cost/benefit analysis.
Make an old-fashioned pro v. con list. Draw a line down the center of a piece of paper and on one side, write down the benefits you’re getting, like established brand, proven market, training, recipes if it’s a food franchise, staffing guidelines, store design. On the other side list the costs and liabilities, including franchise fee, money you’re required to pay for marketing, mark-ups on merchandise and ingredients the chain requires you to buy, the share of sales you must pay in royalties. Consider whether you could hire a consultant to help you open up your own donut or sandwich shop, and instead of paying royalties, mark-ups and marketing fees, keep that money for yourself.

Small Franchises in Australia – Franchising opportunities

When was the last time you made a fast food stop or purchased a cup of coffee before work? If the brand is recognizable and has multiple locations throughout your city or town, like McDonald’s it’s quite possible your favorite food joint is a franchise.

Owning a franchise has countless benefits. You can profit from the franchiser’s recognizable brand while essentially running your own operation. The most profitable franchises rarely fail, removing the risks typically associated with opening a brand new business.

Let’s take a look at the definition of a franchise and the basic criteria for evaluating a franchise opportunity.

What is a franchise?

A franchise is a business in which independent entrepreneurs use the rights to a larger company’s business name, logo, and products to operate an individual location. The franchiser is the owner of the larger company who sells the rights to license their business, and the franchisee is the third-party owner and operator of the business locations. Franchising opportunities arise all the time, you just need to search and find the right franchise opportunity for you.

You’ve done business with a franchise before, even if you don’t know it. Maybe you’ve even considered purchasing and owning one yourself.

But which franchises are best suited for your budget and skill set? Let’s take a look at how you can evaluate a franchising opportunity.

How to Evaluate a Franchise Opportunity

No franchise is one-size-fits-all. Entrepreneurs who want to open a franchise must take into account their budgetary constraints and the franchiser’s support system during the evaluation phase.

Here are a few criteria that you should consider.

Franchise Fees and Set-Up Costs

Every franchise opportunity requires an initial upfront fee. This price can range from hundreds to hundreds of thousands of dollars.

Preferably, the franchise fee would be paid out-of-pocket (though some franchisers offer financing options). Either way, we recommend having at least $10,000 to invest up-front.

Profitability

When you’re evaluating a business investment, it’s important to know if the opportunity is worth the money. Determining the profitability of a franchise isn’t an exact proven equation, but there are a few factors to help considerthe details:

• Unit growth: See how many units (franchise locations) have opened in recent years.
• New franchisee success rates: Look at the percentage of new franchises that are still operating after a year.
• Franchiser’s financial statements: Analyze the franchise disclosure document and look at average sales per unit.

Support Systems for Franchisees

When selecting a franchiser, take a look at the support systems they’ve put in place to ensure their new location is a success.

7Eleven, for example, provides training to accepted franchisees and provides support. They also have a resource center with seminars and events. Not all franchisers, especially small ones, will have extensive resources like 7Eleven, but make sure they offer basic training or an initial training program.

Time Commitment

Operating a franchise will be a ongoing commitment, ideally for a large amount of years to provide continued growth to the business — you can’t operate a store and leave after a year. The franchise term for McDonald’s, for example, is 20 years.

Be sure that you’re prepared to stick around for a while without pursuing other time-consuming commitments (such as an additional career or franchise). If you feel that you’ll want to leave in less than ten years, be sure to choose a brand whose franchises are easier to sell.

Available Territories

Most, if not all, franchisers are looking to grow in a particular location or locations. It wouldn’t be profitable, for example, to open a new location just miles from another, or in an area where there’s no demand for the stores products and services.

Be sure to search and check whether your target franchiser wants to open a location in your area. If not, decide whether you’re willing to relocate.

Brand Recognition or Growth

How recognizable is the brand that you’ll be franchising? If it’s a smaller brand, has it seen significant growth in the past year?

These two characteristics will determine whether it will be profitable to operate a franchise for a prospective brand. Sometimes, going for a big, highly recognizable brand isn’t ideal, because up-front costs are significant.

A smaller franchiser could be an easier entry point — so long as the company has been growing in revenue and continue to increase their sales and marketing.

Now that you know how to evaluate an opportunity, take a look at the best franchise opportunities to select from.

Become an Entrepreneur by Buying a Franchise

You can become an entrepreneur by starting your own business — or by buying a franchise from a major brand. Take advantage of an established brand name while enjoying the perks of running your own operation. Franchises can be highly worthwhile to own, especially when you create a strong business plan that helps your profits grow.

 

Low-Cost/Cheap Franchises

The initial investment in a franchise can be of large costs, and range anywhere from a few thousand dollars to over a million. If you’re looking to purchase a franchise at a lower price point, there are options for you in a variety of industries.

Music Lessons Academy have seen unprecedented growth or are particularly driven to grow. They’re actively looking for new opportunities because they’re still in the initial stages of expanding their reach.

Music Lessons Academy is a prime opportunities for prospective franchisees. You can take advantage of a growing name in the business while being the reason the name grows and becomes more authoritative.

The Music Lessons Academy franchise combines remarkable financial opportunity with the ability to make a profound and lasting impact on the lives of children (& adults) in your community. Partners trust us, and students love our lessons.

Why You Should Invest In A Music Lessons Academy franchise?

There are many great reasons to join the Music Lessons Academy franchise network and here are the top four:

1. Fast Track Your Success.

One of the biggest stumbling blocks of going into business is a lack of knowledge and experience about what works and what doesn’t. Sure, you can give something a go and see if it works.

But a much smarter way is to find someone who is already doing well and join their team. This is exactly what Music Lessons Academy offers franchise partners. The chance to be their own boss and operate their own business but secure in the knowledge that there is a team at head office supporting every aspect of the business.

2. Repeat Customers

One of the most expensive costs in a business is acquiring new customers. One of the great benefits of Music Lessons Academy is that our students pay by the term. So, we have money booked into the future

3. Low Overheads

The Music Lesson Academy business model has low fixed overheads as there are no expensive premises to rent and no front office staff to hire. All of this helps to keep costs down and profit margins high to achieve success in growth and marketing.

4. Flexible Work Hours

Owning a Music Lesson Academy franchise means you get to be your own boss and with that comes flexible working hours. The franchise partners role is to mostly administrative as well as some sales and marketing, This can be carried out from a home office meaning its very flexible and offers many paths to success.

What do you get with a Music Lessons Academy Franchise?

Music Lessons Academy offers franchise partners the following benefits:

Established Proven Business

With 5 years of operations, 550+ students, 160+ teachers and multiple locations through Australia and New Zealand.

Professional Training

Excellence in training, and support. Individual account support for each franchisee.

Affordable Start Up

Low-cost entry to set up an academy. Low cost expenses as you grow.

Ongoing Marketing Endeavours

Our tried and proven marketing formulas will enable you to quickly grow your academy.

Full Documentation Business & Lessons

Ready-to-use teaching materials, lesson plans, media, marketing materials, and workbooks.