When you consider buying into a franchise system, it's a great way of ensuring that you are working with proven methods that will ensure success in your business. It helps you to avoid some risk that is associated with starting your business from scratch.
However, in order to buy into a franchise, it often requires a substantial investment. In order to invest in a franchise, you will often have to get financial assistance directly from the franchisor or from a bank that the franchisor may have a relationship with already.
Since franchising is a recognised industry, many of the high street banks have created franchising departments or teams to assist a potential franchisee or franchisors with the investment required to start up a franchise. These banks can be helpful in the process of setting up a franchise, as they will be sources of valuable information about financing a franchise.
Before you even start thinking about investing in a franchise opportunity, ask yourself two very important questions:
- How much can I afford to invest in a franchise?
- What return on investment do I need to cover business expenses as well as personal living expenses?
- Initial costs (that includes the franchise fee so you can trade under the brand, cost of setting up a location and/or getting a vehicle with livery)
- Ongoing costs (day-to-day business expenses)