Frequently Asked Questions
Why use a franchise broker and not go directly to the franchisor?
We use our industry experience to provide you with the information you need when you are considering buying a franchise business. We know which franchises are considered safer, more reliable, and most profitable. We also know which ones are currently available in your area. More importantly, we can help you determine which franchises are the best fit for your role as a business owner! With our services, you save time, money, and your sanity during the important decision-making process.
How much does it cost to use the services of a franchise broker?
The client doesn’t pay for the services we provide. You pay the same price for the franchise just as if you had gone directly to the franchisor. The franchisor absorbs our fees into their marketing costs. The franchisors respect the processes our franchise brokers follow and recognize the quality and type of candidates we refer to them. We are uniquely able to provide a win-win scenario for the client and the franchisor.
What are the benefits of buying a franchise?
Franchising offers individuals the opportunity to be in business for themselves, but not by themselves. The franchisor offers support, experience, and knowledge of all aspects of the business. They have been there so they know what challenges can arise and the best ways to overcome them. When you join a franchise concept, you get to “stand on the shoulders” of all those who came before you.
Franchisors provide you with the tools to be successful. They will train you prior to your opening. They give you advertising and marketing support that can help build your business. Most importantly, a franchise reduces your risk with systems proven to work. Their training and support help you handle whatever comes up along the way.
Is financial assistance available?
Yes, and we can introduce you to the funding sources who can assist you. Funding a franchise purchase is usually a major consideration for our clients. We feel it is critical to discuss financing options early on in the process so that any problems can be addressed.
How long will it take to get my business started?
This depends almost entirely on you. After starting our process, if you are motivated and responsive, we can typically find a great franchise match for you within one to three months.
Do I need specific industry experience to buy a franchise?
No, in fact, most franchisors prefer that you have no experience in the industry prior to owning the franchise. They prefer this because they want you to learn their systems and follow their processes and procedures. Franchisors are typically looking for candidates who are coachable and have transferable skills. They want people who can motivate employees, close sales, and manage operations efficiently.
How will a franchise broker find the best franchise for me?
We want to match you with the best franchise concept that meets your specific criteria. But we can’t do that unless we know what those criteria are. We learn these criteria by asking you questions designed to help us narrow our search and provide you with the best matches. Here are a few examples of the type of questions we may ask you:
- What is attracting you to business ownership?
- Have you owned your own business before?
- How many hours and what time of day do you like to work?
- Do you like selling or customer service?
- Is there a certain location you desire?
- How does managing people make you feel?
- What kind of capital do you have available to start your business?
- Is a recognized brand name important to you?
- Do you want to have more than one location?
- When do you want to open your business?
Once we have answers to these types of questions, we will create a personal profile for you and use it to research franchise options. The consultation process makes it easier to match you with the opportunities that meet your specific criteria. We will narrow down the choices to a short list of franchises. With just a few opportunities to evaluate, you save a lot of time and effort.
There are hundreds of franchise opportunities available to you. Sifting through them all can take months for a person without our knowledge of the industry. Many people get frustrated and give up. Using our service can help you avoid this situation and put you on the path to owning your own business that has everything you really want.
To be part of our inventory, each franchise concept has been thoroughly reviewed. We have high standards for every aspect of the business. By doing our homework, we are confident that we can offer you the best opportunities that are right for you.
What Is A Franchise?
What is a Franchise and what are the benefits?
A franchise is a business opportunity that is regulated by the FTC (Federal Trade Commission). There are 2 general types of franchises - Business Format Franchising which is what most people think of when considering a franchise (concepts like McDonalds, Subway, 7-Eleven and others) and Product Distribution Franchising which is associated with product distribution (concepts like Coca-Cola, Ford, Exxon, and others). For the purpose of this website, we address and work with select franchise systems in the business format category mentioned above. A Franchise is often described as a business in a box; however, it is so much more than that. In basic terms, a franchise is a business opportunity that provides systems and processes often in a turn-key fashion that allow someone with limited to no experience in a particular category to start a new business and hit the ground running. Often these processes and systems will include access and use of trademarks, patents, marketing programs, training, national accounts, bulk buying, and more.
Is a Franchise and a Business Opportunity the same thing?
While similar in some respects, they are different in how they operate and how they are regulated. Some Business Opportunities are regulated by the FTC while all Franchise Systems are federally regulated. An investment in a Business Opportunity is often an upfront purchase that may or may not require the buyer to buy supplies or services on an ongoing basis. Additionally Business Opportunities are not legally allowed to charge an ongoing royalty percentage to the owner and they are also not allowed to make any financial claims as to revenue or profit potential. In a Business Opportunity, the company selling the opportunity will often make their money on the initial sale to the buyer and may make additional profits from forced ongoing sales of products or supplies.
A Franchise is regulated by the FTC and requires one or more federal and state disclosures. One of the key disclosures required by the FTC is the Franchise Disclosure Document (FDD). Additionally, the majority of franchise systems charge a fixed or variable royalty on an ongoing basis often for the use of their trademarks, systems, training, and ongoing support. Franchise systems can require that some or all of the products or supplies be purchased from them or from authorized vendors.
Both systems can have their pluses and minuses and there are few, if any, guarantees of success in either format.
What is a Franchisor and a Franchisee?
The Franchisor is the company that is offering the franchise concept for sale. The Franchisee is the individual business owner that has purchased or bought into the system.
Should I buy a franchise or start my own business concept from scratch?
Obviously this comes down to a personal decision. Franchising can make a lot of sense as it allows someone to move into an industry or category that they may or may not have experience or expertise in. There are numerous potential benefits in buying a Franchise including a proven business model and system, training, brand awareness, marketing and support programs, use of existing trademarks and patents, etc. Not to mention that there are people there to guide you (both from corporate as well as other franchisees) and help you sidestep potholes that you might otherwise be unaware of.
I've heard something about an FDD - what is that?
The Franchise Disclosure Document (FDD) is a disclosure document required by the Federal Trade Commission (FTC) for the sale of a Franchise. The document is broken down into 23 Items including areas like average investment cost, number of new, existing, and terminated franchise units, financial performance (Item 19 - more on this later), trademarks and patents held by the franchisor, and a list of existing locations with owners' names and contact information for validation. The FDD also includes a copy of the full Franchise Agreement that sets out the terms of the franchise contract between the buyer and the franchise system.
Is a Franchise right for everyone?
No. Franchises make great sense if you are wanting to buy into a concept and follow a system. While some franchise systems are flexible and open to suggestions on how to make their concepts better / different, others simply expect the franchisees to follow the proven system that has made the franchise brand successful. We can help you work through whether Franchising makes sense in your particular case.
What is a Franchise resale?
A Franchise resale can be one of two things - first it can mean that an existing franchisee is looking to sell their location. In these cases, it's not uncommon for the seller to ask for some goodwill or profit for a going concern and established location. It can also mean that the franchisor has taken back or plans to take back the territory from the franchisee for a number of reasons. Franchise resales can be a great opportunity if the brand, location, and price align with what you are looking for.
I'm not interested in a food concept - are there other Franchise opportunities out there?
Yes, this is probably one of the biggest misconceptions of franchising. While food does make up the largest percentage of Franchise offerings, there are over 300 industries represented by various Franchise opportunities on the market today including automotive, cleaning, child development, fitness, home services, staffing, technology, and many more.
Costs and Profit Potential?
How much does a Franchise cost?
Franchises can start around the $10,000 mark plus working capital and go up into the millions of dollars depending on the concept. Most franchise systems charge a Franchise Fee to join their system plus additional expenses for equipment, vehicles, leases, training, etc. Franchise systems will also provide a range and sometimes an average total cost to become a franchisee that may include the franchise fee. These costs and averages are detailed in the Franchisor's FDD document.
What are the margins and how much can I make as a Franchise owner?
Its a great question. As with any business, this depends on several factors. While marketing your business can be critically important, the most important factor is you and the effort you invest in your business. As the owner, you are the boss and you control the number of hours you work and how you manage your business. Some Franchise systems will provide an Item 19 (Financial Performance) in their FDD. This can include sales for one or more locations, expenses, and in rare cases, even profits. There is no requirement that a Franchise system provide an Item 19 and lack of one does not necessarily mean the franchise system is bad or trying to cover up bad numbers.
What is the Process to Own a Franchise?
How do I go about buying a franchise?
It's a great question and you are in the right place! We would encourage you to contact us and let us help with the process. Much like like using a Realtor when buying a house, you will see more concepts, get expert advice, and it won't cost you anymore when working with us. Check out our process below for more details.
Is there a waiting period?
Yes - the FTC states that there is a 14-day waiting period while you review the FDD for the specific franchise system you are looking at. In our experience the shortest closing timeline is around 35-days with the average around the 90-120 day mark. Many franchise systems can be open for business within 6-8 weeks of closing. If real estate or leasehold improvements are involved, the process can take 6-12 months from closing.
What is the difference between Discovery and Validation when buying a franchise?
Discovery is generally referred to as the process of meeting (via phone, video, or in person) the franchisor to learn more about their systems and processes. During this period, you may be invited to an online or in person Discovery Day that may take several hours. At some point during the discovery process, the franchisor will likely send you a copy of their FDD to review. Validation typically happens after receiving the FDD and is the process of contacting individual franchisees to get a feel for their experiences and how the franchisor has measured up. During these calls, we encourage our clients to ask about While financial performance and profitability can sometimes be touchy subjects, this can be a great time to ask specific questions from people that do have first hand knowledge on the subject and are not bound by federal law.
What is a Franchise Broker and Why Should I Use One?
What is the difference between a Franchise Broker, a Franchise Consultant, and a Franchise Advisor?
In two words - very little. You may hear the term Broker, Consultant, Adviser, Coach, etc. used by various people in this industry. As they relate to matching individuals with franchisors, the services they provide are often very similar. The FTC classifies us as Franchise Brokers so that is how we refer to ourselves. Much like an executive recruiter, the franchise companies pay us a referral fee upon a successful placement.
What makes Franchise Broker Group different?
We love this question. We are a team of Certified Professional Franchise Brokers working for you. Everyone in our office is uniquely qualified as they have both corporate experience as well as having owned their own businesses. We speak from a position of experience and understanding of what it takes to start a successful business and the challenges business owners face on a daily basis. We operate on a full-time basis out of professional offices in the Greater Nashville area while many of our peers in the industry work part-time out of home-based offices. Additionally, we work with and maintain relationships with over 850+ franchise concepts vs. 300-400 for the average franchise broker. We use a state of the art matching system along with the best assessment tools and research information available on the market today. We also consult with companies looking to franchise their business as well as existing franchisors looking for specific development or operational support. We encourage you to stop by, give us a call, or send us an email to see how we can help you on your franchise journey.