Franchise Ownership: What to Know Before You Buy

Franchise Ownership: What to know Before You Buy

Owning a franchise can be a great path to financial freedom and a savvy investment, but there are some things to know before you buy. Learn more about franchise ownership.

Can You Make Money?

Can you make money: This is the bottom line for anyone looking to open a business. Franchise ownership is one potential path to profitability. A quick search of the internet will tell you many franchise owners can earn anywhere between $50,000 and $200,000 or more annually. But the real answer lies within whichever franchise you choose to buy, as well as how you perform as a business owner.

Before you decide which franchise to hitch your wagon to, research a variety of brands to see how they fit with your financial goals. A franchisee can make money by following the business model included in the purchase of the franchise. But while you’ve invested in a blueprint for success, that doesn’t mean you’ll be successful. Different franchisors offer varying levels of support, but they cannot guarantee or predict a particular outcome. In many cases, having some previous experience being the boss can come in handy. Opening any business comes with risk, so you’ll want to conduct careful research into each franchise you’re considering.

Do Your Research

Researching the brands that interest you will arm you with the necessary information to make a wise choice. The International Franchise Association (IFA) recommends the following nine points to investigate when considering a particular purchase:

• What kind of experience is needed to operate this franchise? Some franchisors may have prerequisites.

• How much time will you need to commit to the operation of the franchise? Certain franchisors may require your hands-on presence for daily operations, while others don’t mind if you delegate to your trusted team.

• Learn about the past performance of the franchise as well as the experience of its leadership team by reviewing the Franchise Disclosure Document (FDD).

• Look into how other franchisees are doing. Are they successful? Are they happy in the franchisor/franchisee relationship?

• Understand your costs to buy into the franchise. These are listed in Item 7 of the FDD.

• Learn what your financial obligation is to continue operating the franchise once you’ve purchased.

• Find out if there are products or services you must buy from the franchisor. Who supplies them? And how are they supplied?

• What are the terms for either renewing or terminating the franchise agreement? How many franchisees have decided to terminate and after how long?

• Understand the financial health of the franchisor.

This last point is particularly important to investigate and is a necessary part of the buying process. Potential buyers should review Item 19 of the FDD, which is provided by the franchisor. It’s important to note that while every U.S. franchise is required to publish an annual FDD, they are not required to include an Item 19. If the franchise you’re considering doesn’t have an Item 19, you need to ask why.

How to Become a Franchise Owner: The Scissors & Scotch Way

Each franchisor will have a process for franchise ownership, and some take longer than others. At Scissors & Scotch, we have a seven-step franchise process that starts with hello and carries you through opening day:

• First, we wanna get to know you a little. Like being in the dating pool, we have our must-haves, nice-to-haves, and financial requirements. We lay out what you need to invest to become a single-unit owner or a multi-unit operator. We explain the initial franchise fee, training fees, and other costs associated with the buildup to opening day. If this all seems copacetic, we move on our second date…er, step.

• Take 10 minutes to fill out an application on our website.

• Wait for us to review your application and contact you. We’ll let you know if we think we should get to know each other a little better.

• We’ll talk on the phone, answer questions, invite you over to see how things are done, stuff like that.

• If it’s feeling like a match, we’ll make you an offer we hope you’ll accept.

• Then things get real. The ball starts rolling toward opening your Scissors & Scotch.

• Opening day is just the beginning of this beautiful relationship. You’ve made it through the franchisee process. Now we’ll work together to build up your business and make sure your investment flourishes.

At Scissors & Scotch, we offer classic grooming services and a fully stocked bar. We want our franchisees to be as successful as possible. Our corporate team is committed to supporting you while continually seeking ways to grow and improve the brand. And if you’re interested in developing an entire area, or owning multiple shops, we’d like to get to know you even more. Request Scissors & Scotch franchise information and get started today.